How Nubank Could Reprice U.S. Deposits
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Why can Nubank change U.S. bank margins without taking any customers?
NewBank doesn't need to take a single one of your customers to change the financial results of your organization. It can do that because New's global platform currently operates at an efficiency ratio below 20%. Yours is probably closer to 60%. That gap gives New far more room to pay for deposits without taking the same margin hit that you would. NewBank is one of the largest digital banking platforms in the world. It's working to open a U.S. bank by July 2027, pending final approvals, and it's bringing a tested strategy. Pay above market rates to pull in deposits and offer credit to people the rest of us probably wouldn't approve. Everyone is asking me whether NewBank will take market share from traditional financial institutions.
My pragmatic take is that while share may shift, that's not the biggest story. Just because NewBank can win without touching your best customers doesn't mean that they'll leave them alone, however. This is a company with traditional deposit and lending products, investment services, and crypto. They also have a net promoter score above 80, where most banks and credit unions I know sit at about half that good. That is no small edge. That's a different category of customer loyalty. And as I've said in a few recent Banking Insight videos, we've done a really poor job of building a moat around our deposit bases.
How did Nubank’s ultra‑low efficiency ratio enable higher deposit rates?
If your customers are checking bank rate on the weekend or they have an AI tool watching savings rates for them, your bank or credit union is already exposed. To see why those numbers matter, look at what they built and where. In 2013, a lot of people in Brazil kept their savings under a mattress because they didn't trust a bank to hold it. Five banks controlled about 80% of the market. Fees were among the highest in the world and tens of millions of Brazilians were outside the formal banking system and had little access to credit. NewBank started by offering a credit product, a purple MasterCard with no annual fee, by invitation only, and with limits as low as, are you ready for this, $14. If a customer paid on time, their credit limit went up.
They called it low and grow. About 29 million people got the first credit card they'd ever had from NewBank. The deposit account didn't arrive until October 2017, about three years after NewBank launched its credit card, once it had a banking permit. By then, it was already the fifth largest credit card issuer in Brazil. The order is actually the reverse of how we usually do it. We open the check account and then go looking for a loan or another product. They gave people credit when nobody else would, and the deposits followed.
What was Nubank’s credit‑first strategy in Brazil and how did deposits follow?
Today, NewBank holds around $42 billion in deposits across its markets. In Brazil, it serves roughly 60% of the adult population, and it has repeated the credit for a sequence in Mexico and most recently, Colombia. The money came out of the mattress when somebody finally treated these customers like they were worth something. Here's the fair objection. Foreign digital banks come to the U.S., and they usually lose. The list is long. Foreign digital banks have struggled here because trust is expensive and changing financial habits is hard. But Nubank isn't starting from zero. More than a million Latin American customers have already asked it for a U.S. banking product. Chime has already proved that an unfamiliar digital brand can become someone's daily financial relationship in this market.
NewBank enters with a tested model and an audience already asking for the product. That shortens the cold start, even in a market where success is never guaranteed. So put yourself in their shoes for a second. You've got a cost structure that almost nobody in our marketplace can match, and you're walking up to a market that looks like this.
How did Nubank’s Mexico launch use high‑yield deposits to attract $3.8 B in 18 months?
The average interest rate on a savings account in this country is under a half a percent. The best rates in the market are about 10 times that, but still under 5%. The difference is sitting in plain view on the comparison sites where your customers already check.
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Chapters
7 chapters
1
Why can Nubank change U.S. bank margins without taking any customers?
0:00–1:29
2
How did Nubank’s ultra‑low efficiency ratio enable higher deposit rates?
1:29–2:54
3
What was Nubank’s credit‑first strategy in Brazil and how did deposits follow?
2:54–4:09
4
How did Nubank’s Mexico launch use high‑yield deposits to attract $3.8 B in 18 months?
4:09–5:35
5
What fair‑lending concerns could slow Nubank’s U.S. rollout?
5:35–6:42
6
Which three actions should banks take now to defend their margin against Nubank?
6:42–7:51
7
How can institutions identify and protect rate‑sensitive versus inert deposit balances?
7:51–8:52