--- title: "Strategy – Nubank + Nucoin Token" url: "https://lumosbusiness.com/analyses/strategy-banking-nubank-nucoin-token/" date_published: "2022-11-12T17:16:48" date_modified: "2024-02-25T21:31:58" domain: "Fintech & financial services" format: "analysis" author: "Joel Finningley" source: "https://lumosbusiness.com/strategy-banking-nubank-nucoin-token/" thesis: "The strategy behind Nucoin is to rewards users, almost as a loyalty program." --- # Strategy – Nubank + Nucoin Token **Thesis.** The strategy behind Nucoin is to rewards users, almost as a loyalty program. ## Key claims - It is estimated that Nubank has a Customer Acquisition Cost of $5, which is considered phenomenally low among Fintechs. - Nubank charges no fees to open a bank account - Nubank charges monthly interest rates of 2.75 – 9.99% per month on credit cards - Most rewards programs are passively linked to spending with a value pegged to local fiat currency. - Heading into 2024, Nubank had more than 8 million ‘active users’ for the Nucoin token, with plans to scale-up significantly heading into 2025. --- #### Brazilian Challenger Bank Nubank is planning to test launch a Nucoin token to 2,000 of its most loyal users in the months ahead. **The question is what is the strategy for a digital banking platform with more than 70M users stretched across Latin America?** - [Nubank in 2022](#aioseo-nubank-in-2022) - [Credit Cards in Brazil + LatAm](#aioseo-credit-cards-in-brazil-latam) - [Nucoin Token Launch + Strategy](#aioseo-nucoin-token-launch-strategy) - [Scaling Nucoin in 2024](#aioseo-nucoin-in-2024) - [More Nubank Posts](#aioseo-more-nubank-posts) ## Nubank in 2022 [Nubank](https://lumosbusiness.com/business-model-canvas-nubank/) has *arguably* been one of the [most successful](https://fintechmagazine.com/banking/top-10-digital-banks-of-2022) of the Challenger Banks to date. To list a few of their many accomplishments: - **70M+** users across Brazil (66M+), Mexico (~3.5M), and Colombia (0.5M) - **$500M** initial investment from Warren Buffett, plus another **[$1B](https://finance.yahoo.com/news/warren-buffett-invests-1b-bitcoin-011723509.html "$1B")** investment in early 2022 after divestitures from Visa and Mastercard - Public Listing (Ticker: NU) on both Brazilian and New York Stock Exchange, and a current valuation **north of $20B** Nevertheless, it has been a hard year for the fledgling [digital banks](https://lumosbusiness.com/future-banking-business-model/ "Future Banking Business Model"). Headwinds related to interest rates and inflation have crushed most technology-related stocks and crashed equity prices to 90% below their 2021 peak in some cases. **Nubank is down more than 50% YTD.** And so the table is set for strategic moves, and in the case of Nubank it appears to be the launch of their Nucoin token, slated for Q1, 2023. > **It is estimated that Nubank has a [Customer Acquisition Cost](https://lumosbusiness.com/analytics-fintech-customer-acquisition-cost/) of [$5](https://www.flowbank.com/en/research/research/nubank-meteoric-rise-but-challenges-ahead),** which is considered phenomenally low among Fintechs. ## Credit Cards in Brazil + LatAm Brazil is a country with more than 200 Million people and a large portion of those who are ‘unbanked.’ But even among ‘the banked,’ Brazil has major problems: - Average **monthly** interest rates on credit cards of [13.9%](https://d3.harvard.edu/platform-digit/submission/nubank-digital-banking/ "13.9%") > annualized > 400% - 5 National Banks who control > [80%](https://www.generalist.com/briefing/nubank-finding-brilliance-in-brokenness "80%") of the country’s assets - Interest rate spreads of > 30% **ie.** those who control the assets, make a killing! [![How does Nubank Make Money?](/assets/2022/04/LumosBusiness_Canvas_Nubank.webp)](https://lumosbusiness.com/business-model-canvas-nubank/) [Nubank Business Model](https://lumosbusiness.com/business-model-canvas-nubank/) Nubank’s Value Proposition has thus landed in the Brazilian market for many reasons, but principally because **the need there is so high**: - Nubank charges no fees to open a bank account - Nubank charges monthly interest rates of **2.75 – 9.99% per month** on credit cards - Nubank can make money on credit card Interchange Fees + Interest Income and still offer a better value proposition than other competing banks - They have a Net Promoter Score of [87,](https://fintechmagazine.com/banking/top-10-digital-banks-of-2022) far greater than their competition from Megabanks As we can see in the graphic below, however, all of the above doesn’t necessarily translate into a massive, income-generating machine like the Megabanks they compete with. ![Brazilian banking sector](/assets/2022/11/Nubank-Revenue-Comps.webp) [Flowbank](https://www.flowbank.com/en/research/research/nubank-meteoric-rise-but-challenges-ahead) Latin American countries offer a world of opportunity for the Nubanks of the world, but there are revenue-growth limitations that suppress their profit potential relative to both the local banking competition and other Fintechs who operate in markets like the USA. **It is estimated that Nubank has a [Customer Acquisition Cost](https://lumosbusiness.com/analytics-fintech-customer-acquisition-cost/) of [$5](https://www.flowbank.com/en/research/research/nubank-meteoric-rise-but-challenges-ahead),** which is considered phenomenally low among Fintechs. It is even lower than Cash App’s (owned by Block), with the obvious difference being that Cash App operates in the U.S. market, a market with much more revenue upside per user (see SoFi data above). [![Fintech Customer Acquisition Cost Data (including Nubank)](/assets/2022/11/CAC_Data_Visual-Nubank.webp)](https://lumosbusiness.com/customer-acquisition-cost-cac-data/) [Customer Acquisition Cost Data](https://lumosbusiness.com/customer-acquisition-cost-cac-data/) All of this sets the context for the inception of Nucoin, a potential spanner in the works to differentiate them from both local Megabanks and international Challenger Banks. ## Nucoin Token Launch + Strategy 2022 has not been a good year for cryptocurrencies – that is probably the understatement of the year. In many ways, the news has gone from bad to worse on the back of fraudulent exchanges and massive balance-sheet blowout. Trust has been crushed. Nubank has a decent Customer Relationship with its clients. The 8.7 NPS stands out in most articles; however, looking at [Reviews](https://www.facebook.com/nubank/reviews) on sites like Facebook, there seems to be **challenges with Customer Service**, which is a problem common among Challengers who have no physical presence. **Nevertheless, trust in the brand remains very high.** As with most of these types of businesses, there are **Power Users** that absolutely love and adore the business. [![Behavioral Business Model Analytics](/assets/2022/06/BusinessModelAnalytics_Behavioural-1.webp)](https://lumosbusiness.com/business-model-analytics-behavioural-profitability/) [Behavioral Analytics](https://lumosbusiness.com/business-model-analytics-behavioural-profitability/) The strategy behind Nucoin is to rewards users, almost as a loyalty program. Powered by the Polygon [blockchain](https://lumosbusiness.com/new-tech-blockchain/), the program will roll out in early 2023 to about 2,000 users, who will be airdropped the tokens digitally. Interestingly, the token will not be pegged to any fiat currency, it will be free-floating like Bitcoin and Ethereum. > To kickoff, Nubank will be inviting 2,000 users to actively take part in the co-creation of Nucoin. The participants will be selected from the most active and engaged members of NuCommunity, an online forum for Nubank customers. > > [Polygon](https://polygon.technology/blog/nubank-taps-polygon-supernets-for-nucoin-token-launch-loyalty-program) **The key link here is to community**. [NuCommunity](https://comunidade.nubank.com.br/) is a bespoke site on the Nubank platform where users engage with one another based on commonly-asked questions, etc. [![](/assets/2022/10/BMTrends-Community-Banner.webp)](https://lumosbusiness.com/community-next-business-model-thrust/) And so we can, there are three dimensions to this Strategy in relation to Banking: - **rewards Power Users** (tangibly) and incentivizes engagement - **brings the Community closer** to the core of the business model - **create new, future revenue opportunities** around a free-floating token (*if it launches successfully)* The fact that it is a blockchain-based token is secondary to the fact that it is a unique rewards + [loyalty incentive](https://lumosbusiness.com/loyalty-metrics-customer-retention-and-valuation/ "Loyalty Metrics – Customer Retention and Valuation"). The company already offers cryptocurrency trading on its platform – a program that has more than 1 Million users – so we know there is demand for digital-currency type of incentives. Most rewards programs are passively linked to spending with a value pegged to local fiat currency. Nucoin is itself a type of ‘digital asset’ presumably pegged to the underlying success of Nubank itself and engagement from within the NuCommunity. There are major risks to this type of endeavor and the program won’t be without its critics, not to mention potential regulatory hurdles related to tokenization of an asset. But if the goal is to truly ‘[take on the banking giants](https://lumosbusiness.com/future-banking-business-model/ "Future Banking Business Model")‘ then these types of risks fit the profile of a ‘Challenger’ in the banking industry. [Nubank](https://lumosbusiness.com/strategy-banking-nubank-nucoin-token/ "Strategy & Banking – Nubank + Nucoin Token") has been one of the high flyers to date in the Challenger Banking industry, offering lower credit card rates than incumbents and a low-fee debit account to build a user base to 70M+. Now they are planning to tokenize some of that brand equity and see if it can kickstart further revenue growth and engagement across its network of Power Users. ## Scaling Nucoin in 2024 Heading into 2024, Nubank had more than 8 million ‘active users’ for the Nucoin token, with plans to scale-up significantly heading into 2025. > Nucoin, which already over 8 million of our customers are using actively. We’re using it right now with an interesting application around loyalty for the platform. > > [Fortune](https://fortune.com/crypto/2023/10/09/future-of-finance-nubank-ceo-david-velez-brazil-fintech-latin-america-crypto-digital-banking/ "Fortune") The [Nucoin Explorer](https://explorer.nucoin.com.br/ "Nucoin Explorer") shows token usage, price per coin, and other relevant data for the token. ![](/assets/2024/02/NuCoin-Explorer-1024x602.webp) [NuCoin Explorer](https://explorer.nucoin.com.br/ "NuCoin Explorer") As we can see, there are more than 15 million ‘wallet addresses’ or accounts created, for a company with more than [85 millions users in Brazil](https://lumosbusiness.com/strategy-banking-nubank-nucoin-token/ "Strategy – Nubank + Nucoin Token"), 5 million in Mexico, and early-stage expansion across Colombia. Fundamentally, everyone who creates a Nubank account can receive Nucoins via airdrop, or they can purchase them. But the design of the program is to reward users for using the Nubank card for their day-to-day purchases. Thus it creates an incentive for more and more users in Latin America to make Nubank their primary bank. ## More Nubank Posts > [Web 3, Wallets & Social Commerce](https://lumosbusiness.com/web-3-wallets-social-commerce/) [Business Model Canvas – Nubank](https://lumosbusiness.com/business-model-canvas-nubank/) [Digital Banking Business Model Outlook](https://lumosbusiness.com/digital-banking-business-model/ "The Digital Banking Business Model – 2023 Outlook") [**Digital Banks, IPOs, & Consumer Trust**](https://lumosbusiness.com/digital-banks-ipos-consumer-trust/ "Digital Banks, IPOs, & Consumer Trust")