A Brazilian who wanted a credit card went to a bank. A handful of banks held about 90% of the market, every busy corner had a branch with a line out the door, and getting a card could take months NU2. Opening even a simple account could mean armed guards, paperwork and months of waiting, and the fees and interest rates that followed were among the highest in the world NU1 NU3. Customers who complained heard the same answer everywhere: "Where else are you going to go?" NU1. And because the lender decided who got credit, wanting better service did not guarantee a card NU3.
Nubank
Nubank offered Brazilians a no-fee credit card run from the phone on its own cloud-built core, let delighted customers recruit the next ones, then sold an account and loans into that base and became the lowest-cost bank serving the most Brazilians.
How Nubank won
- 1 · 2013–14Innovation: a no-fee credit card run entirely from the phoneA co-founder who had run Itaú's card business launched a card with no annual fee, applied for and managed in an app, on April 1, 2014.Transparent Pricing
- 2 · 2013–21Own cloud-native core: servicing at a fraction of a bank's costCard processing written from scratch on the cloud; cost to serve and overhead per active customer about 85% below incumbents by 2021.Novel Architecture
- 3 · 2014–21Customer love as the acquisition channelOne review brought 5,000 then 10,000 sign-ups a day; by 2021, 80–90% of customers arrived organically at about $5 each.Customer Referrals
- 4 · 2017–24Account, loans and investing sold into the same baseNuConta (2017) opened the relationship to people credit could not serve; the January 2021 cohort reached 3.5 products in three months.Multi-Product
- 5 · 2021–25Scale economiesCost to serve held at $0.8 a month as customers reached 131 million; efficiency ratio 19.9% against Itaú's 36.9% (2025).Scale economies
Versus Itaú Unibanco (Itaúcard, Credicard Zero, iti): Itaú sold cards with fees through branches on a mainframe core, and answered Nubank with side brands, Credicard Zero and iti. Nubank ran a no-fee card from the phone on its own cloud core, let customers recruit the next customers, and sold an account and loans into that base until it served more Brazilians at a lower cost than any bank.
Arena: Market Conditions Before Nubank
How each step happened
Step 1 of 5 · 2013–14
Innovation: a no-fee credit card run entirely from the phone
Nubank's innovation was a credit card with no annual fee that a customer applied for and managed entirely in a phone app, from a company with no branches NU10 NU1. At Itaú Unibanco and the other large banks, a card came through the branch, could take months and carried fees NU2 NU1. Removing the fee and the branch visit made trying a new provider cheap: a customer could add the card without moving the rest of their banking.
The idea came from inside the incumbent. Co-founder Cristina Junqueira had spent five years at Itaú Unibanco, Brazil's largest bank, most of that time running the largest part of its credit card business NU1 NUX-2. She says "the customer's perspective was actually very, very low in the hierarchy of priorities" there, and a year of work on card products people would actually want was shut down just before its pilot NU1. She resigned and joined David Vélez, who wanted to build a bank around the customer and technology NU1.
A credit card was also the one product they could start without being a regulated bank NU1. The first transactions on the purple card took place on April 1, 2014 NU1. The lower bill drew attention, and the simple app gave customers a reason to keep using the card NU2.
Rivals Itaú did not adopt Junqueira's proposals, including fee-free cards, while she was there NUX-2. Its own no-annual-fee card managed in an app, Credicard Zero, came in November 2017 under its separate Credicard brand, launched to compete directly with Nubank, and still charged for extras such as SMS alerts and withdrawals NUX-4 NUX-3.
Step 2 of 5 · 2013–21
Own cloud-native core: servicing at a fraction of a bank's cost
The systems behind the app were built alongside the card from 2013. Co-founder and CTO Edward Wible wrote the credit card processing from scratch and ran it on Amazon's cloud from the beginning, automating even the physical servers that card authorization required NUX-6. The large banks ran their core systems on mainframes NUX-6 NUX-8. Doug Leone recalls that competitors did not see the backend work and "thought the company was nothing more than an app" NU2.
The architecture made servicing cheap and change fast. In December 2017, with 2.6 million customers, Nubank ran about 100 small services and shipped about 20 changes a day NUX-6. Its monthly cost to serve an active customer was $0.8 in 2021 NU4, and its F-1 put cost to serve plus general and administrative expense per active customer about 85% below incumbents' in Brazil NUX-1. That low cost is what let Nubank charge no annual fee and still spend heavily on customer service in step 3.
Rivals Itaú began considering the cloud in 2017; by December 2024, 65% of its applications had moved, with the remaining mainframe accounting routines due by 2028. It reports a 55% cut in cost per transaction from the migration so far NUX-8.
Step 3 of 5 · 2014–21
Customer love as the acquisition channel
The card started slowly; students already had their parents' cards and wanted airline miles NU1. Then a small online publication described getting a no-fee card entirely on a smartphone as magical. Nubank took about 5,000 sign-ups that day and 10,000 the next. Customer service could not keep up, so Nubank started a waitlist, which made the card more wanted NU1.
Nubank designed the whole experience so that customers would "love us fanatically", in Vélez's words, when most Brazilians felt anger toward their banks NU1. That loyalty became a defense in 2016, when a proposed rule would have made card issuers pay merchants in one day instead of 27, requiring billions in working capital. Tens of thousands of customers asked the Central Bank to protect the first new competition they had seen in decades, and the Central Bank dropped the change NU1.
Customers kept doing the selling. Nubank's F-1 reported that 80–90% of customers arrived organically, through referrals and word of mouth, at a blended acquisition cost of about $5, and that customer support took about 30% of operating expense against 10% for marketing NUX-1. Nubank reported Net Promoter Scores of 90 or above NU4. The low-cost core of step 2 paid for the service that produced the referrals.
Rivals Brazilians who complained to their banks were told, "Where else are you going to go?" NU1. Itaú's digital bank iti needed a 2021 relaunch to pass 6 million customers, 84% of them new to Itaú NUX-5.
Step 4 of 5 · 2017–24
Account, loans and investing sold into the same base
The card had a ceiling. By 2018 Nubank had received over 13 million card requests and had turned down a considerable share of them on credit grounds, while its card base neared 3 million accounts NU3. After receiving a banking license in 2017 NU1, it launched NuConta in October 2017: a free account for saving and transferring money that people could open without qualifying for credit NU3. Interviews with people who were mostly not yet customers led the team to leave advanced investing out of the first version NU3.
Each later product used the same app and the same customer relationship. By June 2021 Nubank offered personal loans, life insurance, investing, mobile payments and small-business accounts, and raised $500 million from Berkshire Hathaway to extend the range NU9. Newer customers took up products faster: the January 2021 cohort reached 3.5 products per active customer in three months, a level the January 2020 cohort took more than 12 months to reach NUX-1. Nubank estimated that over 55% of its monthly active customers of more than a year used it as their main bank account NU4. A second product did not need a second route to the customer; that shared cost is scope economies.
Rivals Itaú launched iti in 2019 as a separate free-account app, added automatic returns on balances in 2021, and began moving iti customers into its main Itaú app in October 2024 NUX-5 NU7 NU8.
Step 5 of 5 · 2021–25
Scale economies
By the end of 2025 Nubank served 131 million customers in Brazil, Mexico and Colombia, 113 million of them in Brazil, about 62% of the country's adults NU6. Monthly cost to serve an active customer stayed at $0.8 from the fourth quarter of 2024 to the fourth quarter of 2025 as the base grew NU5 NU6. Its efficiency ratio, operating expense as a share of revenue, was 19.9% NU6. Size also made funding cheap: $41.9 billion of deposits cost Nubank 87% of the interbank rate NU6. The group earned $2.9 billion of net income in 2025 NU6.
That cost position comes from the cloud core of step 2 and the near-free acquisition of step 3, spread across the largest customer base in Brazil. A new digital bank starts without that spread, so it pays more per customer to serve and to fund. Lending still carries ordinary risk: 6.6% of loans were more than 90 days past due at the end of 2025 NU6.
Rivals Itaú's efficiency ratio in Brazil was 36.9% in 2025, with a target of 35% in retail by 2028; it still earned R$46.8 billion of net income and a 24.4% return on equity in the fourth quarter NUX-7. Itaú stayed highly profitable on its own customers, while Nubank built the largest base at the lowest cost.
Key dates
- 2013Founded; seed round from Sequoia and Kaszek NU1 NU10
- 2014-04First card transactions; months later one review brings 5,000, then 10,000 sign-ups a day NU1
- 2016Tens of thousands of customers ask the Central Bank to keep Nubank alive NU1
- 2017Banking license NU1
- 2017-10NuConta opens the relationship to people without credit
- 2017-11Itaú launches the no-annual-fee Credicard Zero NUX-4
- 2017-122.6M customers About 100 services on the cloud, about 20 deploys a day NUX-6
- 2018-06Nearly 3M card accounts Over 13 million card requests NU3
- 2019Itaú launches iti, a separate free-account app NUX-5
- 2021$1.7B revenue Full year; 53.9 million customers, 41.1 million active NU4
- 2021-0640M+ customers Berkshire Hathaway invests $500M NU9
- 2021-1280–90% organic acquisition Blended acquisition cost about $5 (F-1) NUX-1
- 2021-12IPO raises about $2.8B NYSE and Brazilian listing; over 7.5 million customers get a share NU4 NU1
- 2024-10Itaú folds iti into its main app
- 2024-12Itaú has 65% of applications in the cloud; mainframe exit set for 2028 NUX-8
- 2025131 million customers; cost to serve still $0.8 a month
Sources
Oldest first.
- NUX-3 Credicard Zero é um cartão sem anuidade para concorrer com o Nubank. Trade press
- NUX-4 Credicard Zero: novo cartão de crédito do Itaú sem anuidade vem para concorrer com Nubank. Trade press
- NUX-6 Architecting a Modern Financial Institution. Founder talk
- NU3 How we designed Nubank’s Bank Account, Part I. Participant account
- NUX-5 O iti, enfim, decolou. Agora, o Itaú Unibanco projeta 15 milhões de clientes até o fim de 2021. Trade press with executive quotes
- NU9 Nubank raises US$500 million from Berkshire Hathaway. Primary source
- NU7 iti Itaú announces automatic account returns. Primary source
- NUX-1 Unpacking Nubank's IPO ('21). Outside analysis of the F-1
- NU2 Nubank IPO: Only the Beginning. Investor account
- NU4 Fourth quarter and full year 2021 financial results. Primary source
- NU8 Itaú Superapp receives iti customers. Primary source
- NUX-8 Itaú Unibanco vai migrar o coração do banco para a nuvem. Vendor press release with customer quotes
- NU5 Fourth quarter and full year 2024 financial results. Primary source
- NUX-7 Itaú Unibanco (ITUB4) supera expectativas com lucro de R$ 12,3 bilhões e rentabilidade de 24% no 4T25. Trade press on results
- NU6 Fourth quarter and full year 2025 financial results. Primary source
- NU1 Nubank: An Outsider Upending the Brazilian Banking System. Participant interview
- NU10 Nubank company profile. Investor account
- NUX-2 Cristina Junqueira. Reference