Nubank Approaches $1 Billion in Revenue Amid Mexican Expansion

Nubank app

Brazilian neobank Nubank is predicting it will someday become Latin America’s largest financial service company.

“I think that will happen eventually,” CEO David Vélez told the Financial Times (FT) Tuesday (Feb. 6), referring to the company’s ambitions to lead its industry in terms of customer numbers.

“We’re now in the top five,” he said. “We see a path towards becoming the leading financial institution in Latin America and one of the leading financial institutions in the world over a number of decades.”

His comments come as Nubank is expected to mark $1 billion in yearly profits amid expansion into Mexico and Colombia, the FT said, citing analyst projections.

“It‘s the first time a western neobank reaches that milestone, so it should give peers and investors confidence in what can be achieved,” said Christoph Stegmeier, of management consulting group Simon-Kucher & Partners.

After launching in Brazil a decade ago, Nubank is now targeting Mexico. That country “has the potential to be as important as Brazil for us,” said Vélez, pointing to its large population of nearly 130 million and higher income per capita.

The FT report also notes that — per regulator CNBV — more than half of all Mexican adults have no bank accounts.

Last year, Nubank began offering personal loans to customers in Mexico as part of a larger effort to promote access to credit and financial products.

The company pointed to findings from Mexico’s 2021 National Financial Inclusion Survey (ENIF), showing that only a third of consumers in Mexico who applied for a loan were able to get one from a traditional financial institution.

“We are having a positive impact by enabling greater access among Mexicans, as around 20% of the smartphone-connected adult population in the country has already applied to build a financial relationship with us,” said Iván Canales, general manager of Nu Mexico. “We hope to continue expanding our footprint in the country with the launch of personal loans.”

Meanwhile, PYMNTS looked at the challenges of modernizing financial services in Latin America in a recent interview with Ximena Aleman, co-founder and co-CEO of Uruguayan FinTech Prometeo.

“What we’re providing is versatile, comprehensive infrastructure that our customers can use in multiple countries at the same time,” Aleman told PYMNTS CEO Karen Webster.

After heading a pair of startups and launching Prometeo, Aleman said she and her company “understood very early on that this infrastructure was quite necessary, especially if we wanted to have better financial services in Latin America,” adding that “we didn’t want to be a Plaid copycat.”


Mastercard and Feedzai Team to Fight AI-Powered Scams

Feedzai, Trust Payments, risk management

Mastercard has teamed with financial crime prevention company Feedzai to help financial institutions prevent scams.

“As payments continue to evolve, fraudsters are increasingly using AI to scam consumers,” the companies said in a news release Tuesday (Feb. 18). “This cost more than $1 trillion last year, with more than 50% of consumers saying they had encountered a scam at least once a week.”

To that end, Mastercard will leverage Feedzai’s fraud platform, available in more than 90 countries, to deploy its Consumer Fraud Risk (CFR) solution to customers across many key markets around the world.

According to the release, CFR provides sending and receiving financial institutions in account-to-account payment transactions with intelligence to spot and prevent scams in real time. Since going live in the U.K. in 2023, the value of authorized push payment (APP) scams has fallen by more than 12% in that country.

Feedzai’s AI-native Financial Crime Prevention Platform, the release adds, is used by leading financial institutions to protect more than a billion consumers worldwide, and upwards of $8 trillion in transactions each year.

“With more than half the world’s population affected, the scale of scam fraud is not only having a devastating impact on consumers, but also surpassing the GDP of many individual economies,” said Johan Gerber, executive vice president, head of Security Solutions at Mastercard. “Together with Feedzai’s global platform we will scale our first-of-its-kind scams solution to more markets, helping more financial institutions combat financial crime faster than before.”

PYMNTS Intelligence research has found that scams became the leading form of fraud last year, ahead of digital payment fraud. The share of scam-related fraud rose by 56%, and financial losses from scams increased 121%. Scams now make up 23% of all fraudulent transactions, with relationship/trust and product/service scams generating the most losses. 

“These scams manipulate individuals into authorizing fraudulent transactions, often using deceptive tactics,” PYMNTS wrote. “Additionally, fraud involving compromised credentials, where individuals are tricked into revealing account details, is also on the rise.”

Additional research by PYMNTS Intelligence has found that many financial institutions (FIs) are turning to artificial intelligence (AI) and machine learning (ML) technologies to detect fraud.

“These technologies analyze large amounts of transaction data in real time, spotting suspicious activity and preventing fraudulent payments before they are completed,” PYMNTS wrote late last year.

The research found that 71% of FIs are using AI and ML for fraud detection, up from 66% in 2023. These technologies can identify anomalies and patterns that might not be detected by human analysts, allowing banks to perform quicker decision-making.