Nubank secures USD 150 mln loan

Nubank, a Brazil-based neobank, has secured a loan of up to USD 150 million from the International Finance Corp, the private lending arm of the World Bank.

It will use the financing to expand its operations in Colombia. One of the biggest fintech companies in Latin America made the move as part of a plan to quickly establish itself in some of the important markets in the area.

Nubank, a Brazilian neobank, secures a loan of USD 150 million from the International Finance Corp, the private lending arm of the World Bank.

The loan will be used to increase access to financial services in Colombia, particularly for women and marginalized communities. It has a three-year maturity.

In addition to encouraging more business competition in favour of consumers, the new loan will expand Colombians’ access to payment systems.

The loan is in line with Nubank’s aim to establish itself as the top provider of digital financial services in Colombia. It aims to encourage the adoption of 100% digital financial services that are more effective, accessible, and easy to use. Nu Colombia, a division of Nubank, is one of the nation’s fastest-growing credit card issuers, with customers in each department and approximately 80% of municipalities. In the last ten months, more than 400,000 cards have been issued.

Nubank’s presence in Colombia

To support its expansion in Mexico and Colombia, Nubank announced in April 2022 that it will spend a USD 650 million line of credit. In August of the same year, Nu Colombia made the announcement that the country’s regulator had granted its proposal to form a financial firm.

With the help of this licence, Nu was able to add a full savings account linked to other credit products to its lineup of credit cards and e-wallets, as well as acquire deposits, a less expensive financing source akin to that used by large banks.

Nu’s goal continues to be to attract consumers who are not yet well-served by the nation’s established banks. In order to do this, Nu planned to establish a center for engineering, product development, and data science with the goal of creating the nation’s next wave of financial services.

Since Nubank began 2023 with a strong foothold in the area and a number of expansion prospects throughout all of its operating territories, it would appear that their strategies were successful. More than 70 million clients were served by the company by the end of Q3 2022.

Economic growth in Colombia

For Colombia’s economy to thrive, access to formal financial services must be improved. The country’s population as a whole, notably women and minorities, can benefit from improved financial inclusion and higher productivity thanks to the digital transformation.

In Colombia, 70% to 80% of all transactions are still made in cash. Both formal savings and credit card penetration are still quite low. Only 59.7% of Colombian people actually have a bank account, according to the World Bank’s most recent Global Findex report. In 2021, only 19% of them borrowed money via a licensed financial institution or online account.

Nevertheless, Colombia has made significant strides towards financial inclusion. According to Banca de las Oportunidades, one indicator of this is the rise in access to financial services, which increased to 87%. With 40% of those surveyed, the nation has one of the highest rates of adoption of this technology in the entire area, only being surpassed by Argentina.

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