The news: Brazilian neobank Nubank reportedly plans to capitalize on the sliding valuations of Latin American fintechs by making acquisitions at a discounted price, according to the Financial Times.
Bargain hunter: Nubank CEO and founder David Vélez told the FT that he thought there would “probably be some consolidation” of fintechs in the region which would provide opportunities for acquisitive growth.
Nubank is no different and is still loss-making. However Vélez has said the digital bank could be “profitable tomorrow,” but was putting growth first. It will likely achieve this through three courses of action:
The big takeaway: As the climate for fintechs in Latin America gets harsher, startups in the region face cooling capital funding and sliding valuations. Neobanks need to balance their bottom-line performance with growth and consider the long-term implications of prioritizing one over the other.
Nubank has the size and customer base to support a degree of risk-taking and it can benefit from picking up startups at a discount in a consolidating market where smaller firms may struggle to survive. But going forward, LATAM-based fintechs can’t afford to take short-sighted punts and need to plan for sustainable growth and monetization in an increasingly unforgiving market.