Nubank, a leading Brazilian neobank traded on the NYSE, has entered the mobile network industry with the launch of its eSIM service.
If you're a tourist who is having a hard time switching a SIM card for your phone, the new offering from this bank will provide 10GB of free-roaming internet. It will serve over 40 countries globally.
Nubank as MVNO
The launch follows the quiet approval from Brazil's National Telecommunications Agency (ANATEL), allowing Nubank to become a mobile virtual network operator (MVNO) in collaboration with wireless giant Claro.
While Nubank has yet to confirm specific details about this MVNO plan, the introduction of the eSIM service marks the company's initial step into the mobile network sector, aligning with a broader trend among fintech companies.
Not Just a Neobank Anymore
Neobanks, digital-first challengers to traditional banking institutions, are expanding their services to attract new customers. These services include budgeting tools, financial insights, and easy stock market access. Similarly, the MVNO market is growing, driven by the rise of eSIM technology, cloud computing, and third-party software that facilitates all-digital distribution strategies.
With Nubank's vision to target more people, the burgeoning trends in mobile networks are expected to boom further.
Nubank's Impressive Growth
Founded a decade ago, Nubank has experienced remarkable growth. Its valuation surged by 170% over the past year, reaching an all-time high of $58 billion in March.
Impressively, the company reported a net profit of $1 billion in 2023, a significant turnaround from a $9 million net loss in 2022. With record revenues in Q1 of 2024, Nubank continues to grow, now boasting over 100 million customers across Brazil, Mexico, and Colombia.
The neobank offers various services, including bank accounts, credit cards, loans, insurance, investments, and now, mobile data for travelers.
Targeting Premium Subscribers
The new eSIM service targets customers of Nubank Ultravioleta, a premium subscription service launched three years ago. Ultravioleta offers benefits such as insurance, higher credit limits, cashback, and family accounts.
Back in April, Nubank expanded into the travel sector by introducing a "global account" in partnership with European fintech Wise, offering low-fee international money transfers. The new eSIM service, providing 10GB of data for travelers in the U.S., Latin America, and Europe, can be activated through the Nubank app.
What's more, the service's infrastructure is powered by Gigs, a platform backed by investors like Google's Gradient Ventures and Uber CEO Dara Khosrowshahi.
Trends in the Fintech Industry
Nubank's move mirrors trends in the broader fintech industry. In February, the U.K. neobank Revolut launched a similar eSIM service for premium subscribers. Last year, Indian neobank Zolve added mobile networks to its services, enabling immigrants to set up banking and mobile services before arriving in the U.S.
We've also seen telecom companies like T-Mobile launch banking services, while traditional banks such as Brazil's Banco Inter and South Africa's Standard Bank have launched their own MVNO services.
Expert Insights on Neobanks and MVNOs
Allan T. Rasmussen, a telecoms industry consultant, notes the growing intersection between banking and mobile services.
"Mobile operators are moving into banking, and traditional banks and fintechs are becoming MVNOs," he explains to TechCrunch.
Both neobanks and MVNOs are digital-first, offering lower overheads and greater agility compared to traditional players. The rise of eSIM technology is further driving this cross-pollination as companies compete for customer attention, revenue, and data.
Regulatory Considerations
While neobanks like Nubank and Revolut are entering the mobile network space, they avoid positioning themselves as traditional MVNOs to sidestep additional regulatory oversight.
MVNOs operate on carriers' infrastructure, and companies like 1Global and Gigs facilitate the launch of mobile services by handling SIM provisioning, billing, and regulatory compliance. This allows fintech companies to offer mobile services without the legal stuff of becoming telecom providers.
Nubank's Future in Mobile Networks
Nubank's travel eSIM service is easier to implement due to its partnership with Gigs, which manages regulatory compliance.
According to Hermann Frank, Gigs CEO, the firm "abstracts away all regulatory complexity" for the customers inside the telecom industry.
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