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Nu enters U.S. banking with high-yield deposits and no-fee rewards, testing whether its proven Latin American digital banking model can travel.
Nu Holdings Ltd. NU is entering a U.S. banking market that is much larger, richer and more crowded than its Latin American base. The opportunity is clear: U.S. retail banking revenues reached about $1.2 trillion in 2024, while consumers pay an estimated $82 billion in banking and payment fees each year, according to Nu. Its opening offer shows how Nu wants to compete. The account pays 3.5% APY with no minimum balance, while its Mastercard $MA credit card carries no annual fee and offers unlimited 1.5% cash back. Planned relationship benefits include 4.5% APY and 2% cash back for qualifying customers, keeping the pitch simple.This formula has traveled before. Nu entered Mexico in 2018 and now serves 16 million customers there. Management says the business reached break-even in six years, two years faster than Brazil. At similar market penetration, monthly ARPAC in Mexico was $12.3 compared with $5.6 for Brazil at that stage.Still, the U.S. test is different. Nu built much of its lending advantage in Latin America from years of transaction and repayment data. CFO Rob Livingston said its technology can cross borders quickly, but developing U.S.-specific data and confidence in local credit models could take roughly 12 to 30 months.Nu appears set to build the U.S. business in stages rather than chase lending growth. Deposits will be held at partner Lead Bank and insured by the FDIC, while Nu develops its national bank operation. Management has said U.S. investment should stay below 100 basis points of its efficiency ratio.
