Bloomberg Línea — With more than 70 million customers in three markets, Brazil, Colombia and Mexico, Nubank (NU) faces the challenge of maintaining the fast pace of growth of recent years, particularly in the current moment of rising interest rates and cost of capital, and amid a certain skepticism from some analysts who cover the financial sector.
But for Thuan Pham, a new board member at Nubank and a former chief technology officer (CTO) of Uber and Coupang, which is known as the Amazon of South Korea, digital banking has the opportunity to build a replicable platform like the one that allowed the ride-hailing app to reach a global scale.
“Let’s look at the experience I have of Uber, which operates all over the world. In Brazil and everything else, we only built a system once. And everything else is customizable by the local team in those countries [...] in which we don’t have engineers everywhere,” Pham said.
“When you get to that level of platform and customization, the speed of business, as you grow at that scale, is incredibly fast. That’s why Uber was able to grow so fast relative to any other company in that industry around the world,” Pham said in an exclusive interview with Bloomberg Línea.
“To me, this is an incredible opportunity and vision that a company like Nubank can achieve,” Pham said in a video conference call from Silicon Valley. At Uber, he led the technology area, which grew to 3,800 engineers and allowed the transportation app to scale to the point of reaching and supporting 20 million rides daily worldwide.
Pham, who was born in Vietnam, is a US citizen and holds a master’s degree in engineering and data science from Massachusetts Institute of Technology (MIT). In the interview, he shared his vision for the future of platforms that offer financial services and the factors that, in his assessment, will define the winners in the race to attract and win over consumers, including the ultimate goal of all: engagement.
The following interview has been edited for length and clarity:
Bloomberg Línea: When you joined Uber, the company was providing 30,000 rides a day. This number jumped in a few years to 20 million. Nubank already has 70 million customers. Is a bigger scale a competitive advantage, or is it a challenge to be able to innovate?
Thuan Pham: Actually, when we look at scale and challenges, we also need to look at how fast we need to grow. Which dimension are we talking about? If we’re just talking about scale in the number of customers, it’s actually not that challenging. Because you can have 100 million customers and they use the product only once a month. That’s not so interesting, right?
But the interesting part about Nubank, Uber and other companies is not only that they have a lot of customers, but that they are highly engaged. The data I saw is that 55% of the customers we have in Brazil are very, very active on the platform. They transact with our services all the time and use it more and more. The problem we have to solve is the number of transactions.
It is like in Uber: 30,000 trips a day is 30,000 transactions a day. When you go from that to 20 million a day in a matter of four years, how do you manage to grow so fast? In terms of technology, product offering and everything else. The product has to be very good for people to start using so much more so quickly. And the burden is how to make the system more reliable.
Nubank is growing. At the moment it is still in the early days of gaining scale. You quoted 70 million customers and 66 million of them are in Brazil. And we are just on the surface of Latin America. We are getting into Mexico, Colombia and many other places. We can get many millions more customers in the future. And we expect that as Nubank continues to innovate and deliver the product that people want, more and more people will use it even more.
And how do you increase that customer engagement?
If we look at a company in its early years, the most important thing is the market fit of the product. You want to build a product that the consumer likes. And Nubank has done a fantastic job over the last 10 years. Whatever is launched, it disrupts the status quo and people love it and use it a lot. Now comes another moment.
Let’s say Nubank is incredibly successful in Brazil. Now it wants to take a similar set of products to Colombia, to Mexico, to other places in Latin America, and eventually maybe to other parts of the world. But each of these regions has different regulations, different laws. How can we build the technology so that the core of the product and offering is there?
How do we allow each regional team in different countries to customize and adapt the product offering to comply with local laws and policies and things like that? If the company can do this incredibly well, it will be able to move faster, with more agility, and grow more easily than another company that doesn’t do this and will need a lot of work with each launch.
So this is where technology becomes not only a very important enabler but also has a different impact on scale. When the company is small, it doesn’t matter much. It just matters that we have things ready and present to the customer what they want.
But when you have 70 million, 100 million, 200 million customers everywhere, in different countries with different laws and regulations and resources, and even product offerings that you want to have on the platform, how do you build Nubank as a technology platform in the fintech sector that is available globally but can be customizable by regions and countries locally?
To me, that is an incredible opportunity and vision that a company like Nubank can achieve. And if it can deliver all of that through its technology and product over the next few years, it will be a phenomenal company. Many times the size of what it is today.
How long does it take to reach this stage? And how can you make that happen?
It has to be a continuous process. It won’t work if everyone goes to the bathroom and five years later a big bang will come with everything ready. It starts first with the recognition that we need to go in this direction. And then, piece by piece, we examine the current product offering at the moment, the number of countries and markets we want to reach, what are the common things we have to provide to everyone. And then we put it on a platform.
It can be many platforms, it can be a payment platform or a storage platform, whatever it is. And then you also modularize the technology stack to define which component should be customizable and which should be common. That’s the main thing.
Let’s look at the experience I have of Uber, for example, which operates all over the world. In Brazil and everywhere else, we only build a system once. And everything else is customizable by the local team in those countries. If you go to France, there’s a different product mix on Uber’s platform compared to what’s in Brazil and the US. Even the names are different and some markets have cabs, some markets don’t have cabs and there are different levels of service.
We don’t have engineers everywhere to customize every one of those features. We build it so that people can activate the configuration file and configure it in the stack and then the product will look different. And that’s where you get to that level of customization. The speed of business, as you grow at that scale, is incredibly fast. That’s why Uber can grow so fast relative to any other company in that industry around the world.
Nubank has the opportunity to do the same thing and that’s why I’m so excited to be part of that journey right now, where the bank is about to hit an inflection point to grow even faster with the scale and resources it has now.
As a user, what do you think needs to be improved for the consumer’s experience of financial services?
Well, I will speak not only as a board member but also as a user, a consumer of financial products and services - I use the brokerage services, for example, of Fidelity and Schwab. I look at my usage pattern and I know that I don’t want to talk to people. It takes too long to call someone and to be on hold, to talk to people, to solve some problem.
You want an app where you can just do whatever you want: buy and sell some stock, for example. Just go to the app and a minute later you’re done. Or send money from my bank account to pay my brothers and sisters. Pay bills automatically and things like that.
But it’s not just about keeping my money, earning interest, paying somebody. It’s about: ‘What if I buy insurance? What if I want a loan? What if I want a mortgage and all the financial products and services?’ That could be, say, a marketplace. And how does the bank, any bank, predict what my needs are based on my usage? What we all appreciate and love about any marketplace, whether financial or otherwise, is when someone seems to know what we want and presents those choices. It seems like magic to me. How do we use technology to learn about what our customers’ needs and then offer them the best we can? Why wouldn’t anyone want that?
For example, if I need to take out a loan to buy a car and I choose some banking application, I get an offer. I can trust that whatever the loan offer is, it will be the best rate. I trust it so much that I don’t have to compare anywhere.
This is how I consume Amazon and other services these days: I simply believe because I trust that company. And then for me the choice is very important, the selection. Selection is choice, but then you have price, which is very reasonable, and convenience. If you get all those points right, whether financial services or any other service, you will get customer loyalty for life.
Again: this is another one of those opportunities that I think exists not only for Nubank but for the entire fintech sector. What company can get there first and offer its customers that level of choice, that level of price competitiveness, trust and convenience?
You were the CTO at Uber and Coupang and therefore led entire technology areas, with engineers, developers, etc. At Nubank you will be a board member, with no executive function. How do you intend to bring this vision of innovation to the bank?
The difference is very subtle, but very important. As CTO at Uber or Coupang, I had an operational role. Very similar to the current CTO or other executives on the Nubank team, where you are responsible for taking tactical and strategic directions to drive the company on a day-to-day basis.
As an advisor, you operate at a level a little bit above that, where you bring all the experience from all the other sectors and all the advisors. The Nubank board is very diverse. Some people are policy experts, some are finance experts. I’m a technology and product expert, and some people are in operations. And we all basically come together to have a collective set of wisdom and experience to be able to help guide the company strategically.
So we operate a little bit more on the strategic framework than on the day-to-day. If you complement that with a very capable end team, with executives who do great execution and put together a great team, the company can achieve a great combination.
You have global recognition for your career in technology and your work as CTO of Uber for seven years. What attracted you to join the Nubank board instead of that of other companies?
People ask me this question a lot. My criteria is very simple. Whatever I do now with my time is based on three simple criteria. One is: Can I make the biggest impact with the time I spend? Whatever the job is. The second is: Is the team motivated and enthusiastic? And is it talented? Because we always want to work with great talent. And the third is: Am I learning and growing as a person as well, while contributing to the impact on the business or whatever I’m involved in? And Nubank is a unique case because it meets all three criteria.
I often work in disruptive companies that bring new technologies, new ideas, innovations to deliver products and services in a much better way than was possible before. If you look at Uber, the same thing, if you look at Coupang and look at Nubank, it is the same pattern. They are different sectors, different markets, but the same pattern. And this innovation DNA is very, very important to me.
The second factor is people, and the talent at Nubank is fantastic. And I’ve been with many large companies like VMware and Uber. And big companies can maintain that culture for a long time. And what really impressed me is that Nubank is 10 years old, but I find the people and the energy level is like they are in the first month of a startup or something.
And the third factor is that I had worked in other industries, but not with fintech. It’s another area where there are a lot of first principles that we’ve learned in different markets and sectors that are similar, but how can we apply that knowledge to drive more innovation in a new sector? And that, intellectually, is very interesting to me as well.
Translated from the Portuguese by Adam Critchley
