The Next 3 Billion | Semafor Events - Cris Junqueira

Yeah, of course. Thanks for having me. Good afternoon everyone. Our story is really one of customer centricity. It all started with us looking at the Brazilian market where people were paying some of the highest fees in the world, some of the highest interest rates in the world, and they had really one of the worst customer experiences in the world. We thought that technology, design, and a lot of data could help reshape that experience. That customer centricity led us to design products and experiences that people were very much into. When we first started, we felt that people were kind of numb. They assumed that was just how financial services worked, and no bank was good anyway, so what was the point? But the minute they saw the possibility of something materially different, they were so ready for it. That's how it started, the spark. But eventually, since we have such a lean model, very efficient with no branches, much less bureaucracy, much more simplified processes, no paperwork, all done through the phone, 100% mobile only, that allows us to have a cost structure that is much more lean and efficient. That efficiency is passed on to customers in the form of no fees or lower interest rates. It also allows us to reach a segment of the population that otherwise would not be profitable for everyone else. A lot of the inclusion that has happened is because these people were at the margin of the system, as players weren't structured well enough to serve them.

Yeah, there was always a relevant amount of people that had never had a banking relationship before. Not early on, because early on you get the early adopters, people that are tech savvy. But over time, one data point for you: in Brazil alone, by the end of 2023, which was the last time we did this analysis, 21 million people had their first credit card with us. That's bigger than many countries out there. Those are all people that were at the margin of the system, had never had access to credit before. In Mexico to this day, we're very relevant already. More than half of our customers had never had a credit card before. So there's a lot of new access and inclusion at this point for sure. And currently in Brazil, we're the largest financial institution in terms of number of customers with access to credit, and that can be very powerful.

Yeah, of course. We are 100% mobile, so from an infrastructure standpoint, connectivity can be an issue. I can say that in Mexico, I wish connectivity were better. In Brazil, we're pretty good. Brazil is probably the highest adopter of all technologies; it's phenomenal. I don't know if you've seen, even the last panel was on AI, but even ChatGPT adoption, I think Brazil is number three on ChatGPT usage in the world, which is phenomenal. I wish connectivity in Mexico were higher, but frankly, that's not a big bottleneck. I think the biggest bottleneck for us is still cash, the use of physical cash, which is something that Brazil has led the way on. People will go for months in Brazil without touching cash. But in Mexico and Colombia, there's still very much a cash-oriented economy. Although we are now close to 15 million customers in Mexico, and almost 70% of them will testify to using less and less cash after they became customers. So I think there's a behavior shift happening towards digitalization and more digital payments, which is a big catalyst for financial inclusion. I think this is something we saw first in Asia with all the fintech companies and super apps. With the super apps and QR code payments, that's very much the case in Brazil today. You'll see people, even street vendors, people on the streets at traffic lights, they'll have a QR code or their phone number for digital payments. Mexico and Colombia aren't there yet. But if they were to accelerate, that's one of the biggest lessons, to your point on south to north, that instant payments and digital payments can be a huge catalyst for financial inclusion. When an economy increasingly uses digital payments, everyone is inclined. There are network effects that incentivize people to sign up for digital accounts, and suddenly there's this flywheel of incentives for people to join the system, open accounts, and concentrate their money flow through the system, which has many positive impacts, even from a tax standpoint, reducing tax evasion and even criminal activity.

Yeah, that's a great question. We have been very lucky coming out of Brazil because the Brazilian Central Bank has always been extremely competent and efficient, but also had a very clear vision into the future. So Pix, which is the instant payment system in Brazil, has been a topic of conversation worldwide. Wherever we go, to Asia or Europe, people are talking about Pix and how much of a revolution that was in Brazil, all the second and third order effects it has had. Also, the open banking and open finance system created in Brazil is still ramping up. Nubank is the number one company today in terms of open banking requests and data usage. So those are two very powerful things that policymakers should be looking into very closely. It's not necessarily about facilitating the entry of new players or lowering the bar for supervision. We have been playing by the same rules as incumbent banks in all our markets, taking years to get bank licenses. But I think there is a lot that policymakers, especially regulators, can do in terms of fostering more competition in the system without necessarily touching the things they rightfully don't want to touch, like supervision or real regulatory requirements.