Nubank

Wise

Nubank

Nubank makes money from credit card interchange fees (1-3% of every transaction), interest on credit card balances and personal loans, and net interest income from deposits (lending out customer deposits at higher rates than it pays in savings interest). The company also earns fees from insurance products and investment marketplace commissions.

The key insight is that by being digital-only with no branches, Nubank's cost to serve a customer is roughly 85% lower than traditional Brazilian banks.

Wise

Wise charges a small, transparent fee on every transfer — typically 0.3-0.7% depending on the currency pair. That's it.

No hidden exchange rate markup, no receiving fees, no minimum amounts. The fee is shown upfront before you confirm the transfer, and Wise always uses the real mid-market exchange rate.

Banks typically charge 3-5% through hidden rate markups, making Wise roughly 8x cheaper. Wise also earns interest on customer balances held in the Wise account and on the float between receiving and settling transfers.

Nubank

David Vélez grew up in Colombia, studied at Stanford Business School, and worked at Sequoia Capital in Silicon Valley. In 2012, Sequoia sent him to Brazil to find investment opportunities.

What he found instead was the worst banking experience he'd ever encountered.

Brazilian banks were controlled by five massive institutions that charged outrageous fees — annual credit card fees of $200+, account maintenance fees, fees on fees. Customer service was a nightmare.

Branches required hours of waiting. The banks had zero incentive to improve because they had a captive market of 200 million people and no competition.

Vélez saw the opportunity and left Sequoia to start Nubank in 2013 with Cristina Junqueira (a former Itaú banker) and Edward Wible (a Princeton engineer). Their first product was a purple credit card — no annual fee, managed entirely through a beautiful app, with transparent billing and real-time notifications.

In a country where banks treated customers like an inconvenience, Nubank treated them like human beings.

Wise

Kristo Käärmann was an Estonian working at Deloitte in London, getting paid in British pounds but needing to send money home to Estonia in euros. Every time he made a transfer, his bank skimmed 3-5% through hidden markups on the exchange rate.

Taavet Hinrikus had the opposite problem — he was Skype's first employee, getting paid in euros but living in London and needing pounds.

They came up with an elegantly simple hack. Käärmann would put pounds into Hinrikus's UK bank account.

Hinrikus would put the equivalent in euros into Käärmann's Estonian account. Both used the real mid-market exchange rate — the one you see on Google — with zero markup.

They were essentially matching currency needs without ever sending money across borders.

In 2011, they turned this hack into a company called TransferWise (rebranded to Wise in 2021). The product automated what they'd been doing manually — matching people who needed to send money in opposite directions and settling the transfers locally in each country.

When perfect matches weren't available, Wise used its own float to bridge the gap.

Nubank

Nubank grew through word of mouth in a country where everyone hated their bank. The product was so much better than the alternative that customers became evangelists.

The invite-only launch created exclusivity and a waitlist that hit millions. People would beg friends for an invite code because getting a Nubank card felt like escaping prison.

The cost advantage was structural. Traditional Brazilian banks operated thousands of branches with tens of thousands of employees.

Nubank had an app and a customer service team. This let Nubank offer free products that banks charged hundreds of dollars for.

The unit economics were unbeatable — when your competitor has 4,000 branches and you have zero, you can afford to be generous.

Geographic expansion into Mexico and Colombia replicated the playbook. Both countries had the same banking problem — concentrated, fee-heavy, customer-hostile banks.

Nubank launched in Mexico in 2019 and Colombia in 2020. Mexico alone already has over 8 million Nubank customers.

Wise

Wise grew through a combination of radical price transparency and media-savvy campaigning. Käärmann was unapologetically loud about how much banks were ripping people off.

Wise ran campaigns showing the exact markup banks charged versus Wise's fee. They published a "hidden fees calculator" that let people see how much their bank was stealing on international transfers.

Banks hated it. Customers loved it.

Word of mouth was enormous. Expats, immigrants, freelancers, and remote workers — anyone who sent money across borders regularly — told everyone they knew once they discovered Wise.

The savings were so dramatic (sometimes hundreds of dollars per transfer) that people couldn't help sharing.

The Wise Platform created a new growth vector. By licensing its infrastructure to banks and financial institutions, Wise got embedded into products used by millions of customers who had never heard of Wise.

When your bank offers "powered by Wise" international transfers, Wise grows without acquiring the customer directly.

Nubank

The IPO timing was terrible. Nubank went public on the NYSE in December 2021 at a $41 billion valuation.

The stock immediately crashed as the global tech sell-off hit and rising interest rates in Brazil increased the cost of capital. The stock fell from $12 to under $4 by mid-2022.

Vélez had to spend a year convincing investors that a Brazilian digital bank was worth owning during a global risk-off environment.

Credit risk in Latin America is inherently higher. Brazil has volatile inflation, currency risk, and a large unbanked population with limited credit history.

Nubank's loan book grew rapidly, and delinquency rates spiked in 2022 as Brazil's economy slowed. Managing credit risk at scale in emerging markets is fundamentally harder than in developed economies.

Nubank has since tightened underwriting and delinquency has improved, but it remains the biggest operational risk.

Regulatory complexity across three countries is a constant headache. Brazil, Mexico, and Colombia each have different banking regulations, consumer protection laws, and compliance requirements.

Navigating three regulatory environments simultaneously while growing at speed requires significant legal and compliance investment.

Wise

Regulatory complexity across 60+ countries. Wise holds licenses in dozens of jurisdictions, each with different compliance requirements.

In 2023, Wise received a record £7.8 million fine from the UK's FCA for anti-money laundering control failures between 2020-2022. Käärmann himself was fined by the FCA for personal tax compliance issues.

For a company built on trust and transparency, regulatory problems hit the brand harder than they would for a traditional bank.

Growth is slowing as the easy gains are captured. Wise grew rapidly by converting customers away from overpriced bank transfers.

But as the most price-sensitive customers have already switched, finding new growth requires either expanding into new products (which dilutes focus) or new geographies (which adds regulatory complexity). Revenue growth has decelerated from 50%+ to the 20-30% range.

Competition from Revolut, PayPal, and traditional banks. Revolut now offers competitive exchange rates.

PayPal has improved its international pricing. Some banks have started matching Wise's rates for premium customers.

The "banks are ripping you off" message becomes less powerful when banks start charging less.

Nubank

Nu Credit Card is the flagship — a no-annual-fee Mastercard managed entirely through the app. NuConta is the digital bank account with free transfers and bill payments.

Nu Invest is the investment platform offering stocks, ETFs, and fixed income. Personal Loans are offered based on credit behavior within the app.

Nu Life Insurance and other insurance products are distributed through the app. Ultraviolet is the premium tier with higher limits, airport lounges, and additional perks.

NuPay is the payments solution for merchants.

Wise

Wise International Transfers is the core — send money to 160+ countries in 40+ currencies at the real exchange rate. The Wise Account is a multi-currency account that holds 40+ currencies with local bank details in major markets (USD, GBP, EUR, AUD).

The Wise Business Account serves companies with international payroll, batch payments, and multi-currency management. The Wise Card is a debit card that automatically converts at the mid-market rate when you spend abroad.

Wise Platform is a B2B API that lets banks and businesses embed Wise transfers into their own products — major banks like Monzo and N26 use it.

Nubank

Sequoia Capital, Tiger Global, DST Global, Tencent, Berkshire Hathaway, SoftBank, Dragoneer

Wise

Andreessen Horowitz, Peter Thiel's Valar Ventures, IVP, Lead Edge Capital, Baillie Gifford, Richard Branson