Building Latin America's largest fintech - Livia Chanes, CEO Nubank Brazil

Nubank (NYSE: NU) is Latin America's largest fintech company and the world's largest neobank with over 100 million users and a valuation of over $70 billion. 

Livia is an INSEAD 09D and prior to Nubank directed tech and business analytics at Itau Unibanco (Latin America's largest bank) and was a Partner at McKinsey.

Transcript

00:00:00 LIVIA CHANES
60% of those customers had access to that product for the first time in their lives. So that's pretty massive if you're talking about credit and how important credit is for the Brazilian economy, for example, or even more sophisticated products like insurance. Hello and welcome to the INSEAD Emerging Markets

00:00:13 NICK LALL
and welcome to the INSEAD Emerging Markets Podcast, where we interview business leaders and emerging market experts on business innovations, market opportunities, and macro-level trends in emerging and frontier market countries. Join us for the next hour to dive deep into the world of emerging markets as we speak with top performers who are successfully investing, working, and living in these markets themselves.

00:00:38 NICK LALL
Welcome to the INSEAD Emerging Markets Podcast. I'm your host, Nick Law, and I'm here today with Livia Chanez, the CEO of Nubank Brazil. If for some reason you haven't heard of NewBank yet, it is a decacorn and the world's largest neobank. More than half of the adult population in Brazil uses Neobank, and it is the largest fintech company in Latin America with over 90 million customers and $400 billion in revenue. Livia is an INSEAD O9D, and prior to leading NewBank Brazil, she directed tech and analytics at Itaú Unibanco, the largest bank in Latin America, and was a partner at McKinsey. So really excited to have you on the podcast. I was thrilled that you wanted to be on, given your background and NewBank's success. I was wondering if you could just start out by telling me a little bit about yourself, where you were in your career before you came to NewBank, and what it was that made you decide to join the

00:01:26 LIVIA CHANES
the company. Perfect. So Nick, thanks for the invitation. It's with great pleasure that I come here today. I'm really an enthusiast. So it's always great to reconnect with this cool community. As you mentioned, so I am Brazilian and I worked for my entire career in Latin America, mostly in Brazil, but also in some countries. As you mentioned, yeah, I started working as a consultant at McKinsey. I've stayed in the firm for about 10 years. And during that period, I experienced solving problems and engagements in multiple industries. This is something that I was really keen on to really understand the different types of businesses and how consumers felt about products. I've always been very passionate about understanding what drove customers to love some brands and some products and some value props versus others, right? How to articulate that into a business case. So I worked in CPG, in retail, banking, most of the verticals, automotive, just to name a few of the industries I worked on during my time as a consultant. And by the time I actually got back from INSEAD in 2009, the tech industry was booming, right? It was starting to take shape again in multiple verticals. I remember, you know, when I was at the MBA, the iPhone was novelty, right? So things were still very fresh. And when I had back from from INSEAD, I decided to join a very early practice that was formed at McKinsey that was called digital, digital marketing, digital, whatever you want to call it. There were no terminology like we have today about product management and, you know, tech was much more basic. And I was fascinated by the change in consumer behavior that was happening and how so many new opportunities in terms of businesses and innovation were emerging. So I decided to embark on that journey. And that's when I started to fell in love with what today we call product management. And I said, oh my God, this is so awesome. We understand what customers want, right? We tie it to a business rationale and we put it together in a product for test, right? And we can iterate. I found that very, very compelling. And so I spent some time doing some strategy consulting on those topics across industries, including one of my clients by the time, which was Itaú. That's when I joined them. Some years later, they invited me to become an executive in the team to lead that part of the business that was also taking shape. And if I was already in love with technology, that's really when it kind of occurred to me that all the possibilities that could bring to the table. Financial services in Brazil has always been a massive industry. It's a massive profit pool. We had a very high concentration. And by the time, right, when I moved from consulting to the industry, the NPSs were pretty low. So it was a pretty unique combination, right? You know, you have this amount of money in an industry where technology is so important and customers are so unhappy. So, you know, so much to do. We did a lot of great, great work back in the days in the previous company I used to work in. And then that was right by the time when NewBank was being founded. NewBank was founded in 2014. I left consulting in 2015. And I spent five years in the industry before I joined NewBank. And I saw how much NewBank was taking advantage of the technology platform and the mindset of the new tech industry to disrupt traditional banking. So I really became very much an enthusiast of what they were doing, right? And learning more and more about, you know, technology and about the challenges of legacy systems and incumbent bankings, just to name some of the challenges in transforming a traditional business into a new tech business, you know, I kind of said, I think, you know, the leverage is really elsewhere. And that's when I met David, one of the founders of NewBank, our current global CEO. And I got to know him and said, look, this is what I know how to do. You know, this is the kind of thing I'm passionate about. And he said, I think you might have a fit. So, you know, I joined the company in 2020, right when the pandemic was breaking out. So it was a pretty bold move. I remember telling my husband, so I don't know what's going to happen, but it's such a one of a lifetime opportunity that I, you know, I'll take the risk. And so I joined the company in June 2020 as a VP of product. And then I worked with the new bank team to launch many of the new products that we have today, expand portfolio and do a bunch of things. And over and over, I got more responsibilities. And more recently, I was named to be in charge of the Brazil operations and formalized as CEO in the beginning of the year. So it's been quite a journey, right? When I look back at the Livia that I used to be like 20 years ago, I think the spark in terms of, you know, understanding how people want things and how to connect technology that was there. I'm just materializing that in a different manner as of today.

00:06:24 NICK LALL
For sure. I mean, it definitely seems that your background prepared you really well for what you're doing now. I was curious if there was anything at NewBank that made it more exciting for you that made you want to leave your previous role? Because I guess on the one hand, you're managing tech and analytics for the largest bank in Brazil, but then there's this new startup that's doing really well and you have the opportunity to come. And what was it about the way New Wake operated or their culture? Was there any aspect of the company that made you want to join?

00:06:51 LIVIA CHANES
Yeah, look, I think Ito is a terrific company, right? They have the reputation and the results speak for themselves. But it's a very different business challenge being within an institution that is already very big and needs to transform both culture and business model having to deal with legacy systems legacy culture right legacy a lot of legacies versus joining an organization that is led by a founder that has everything ahead to be built where you have a lot of autonomy to shape how things are going to be built, right? What the kind of, in participating the very nascent definitions of this company, right? When I joined NewBank, right? The number of products, number of customers, the number of countries were just like incomparable with what we have today. And I look back, I say, oh my God, many of those decisions I made myself, right? And I think this kind of opportunity you don't get in a more established my many of those decisions company. I made God, right? And I think this kind myself, of opportunity you don't get in a more established company. The ability to influence to that extent is pretty unique. And that's something that I like a lot, right? I'm more kind of an entrepreneur. I'm bouldering the way I think about things. I prefer to build things from zero to one than to just manage at scale and marginally optimize. So I think over time, you just learn the kind of things you're passionate about and the things you do better. I like to build teams, right? So this was something that spoke to my strength and to my passions. So that was really, really great. I also happen to have a very high cultural affinity with the culture of New Bank, between the culture of New Bank and my personal values, about doing the right thing, about being bold, of being non-consensual, right? Of disagreeing with things that you think are wrong, doing the right thing for the long term and putting customers first. And we really leave those values. And for me, that matters a lot. So it was a great fit.

00:08:42 NICK LALL
Amazing. Yeah. I think that the culture clearly, from everything I've heard, is very customer focused. And given that Brazil was in the situation that it was in when NewBank started, that there was such low satisfaction, you've clearly changed that. And that is, I'm sure, a big part of the success of NewBank. You did speak a little bit, too, that you've grown a lot and launched a lot since you took over at NewBank. You did speak a little bit too, that you've grown a lot and launched a lot since you took over at NewBank as country manager of NewBank Brazil, gained 20 million new customers, and you launched more than 50 new products and services. I was wondering if you could talk about your process for launching those products and services and what you've learned along the way, how you've gotten better at that and how you have been so successful in doing that. Perfect. So I think it's very hard for you,

00:09:23 LIVIA CHANES
it's very hard for you, for any team, any company to really scale and launch that many products while you grow so much if you centralize the decisions too much, right? So what we try to do at NewBank is to have a clear strategic framework. This is what we're solving for. This is the principles that we need to respect, but decentralize a lot of the execution for the teams, bottoms up to come up with these great features, great innovations, great products all at once. So this balance between having a clear framework, a clear prioritization of what we are solving for, establishing the boundaries and the principles and this decentralized execution was the way for us to kind of scale the amount of work and opportunities that we could be tackling. So that's how it happens. If you ask me today, right, I don't even know how many products and features are being launched this week. I know some of them, but, you know, things just flow through the organization.

00:10:24 LIVIA CHANES
through the organization. And I think that's an important principle that we try to respect at NewBank, how we preserve the autonomy of the teams as we scale and keep the oxygen for those individuals to have the ability to innovate, to propose, to make their own decisions within a framework that we centrally define. Because I think what we cannot do at this point with the scale that we have is just to say, okay, guys, you go, you innovate, you do whatever you feel like, right? Because then it becomes messy. So I think this is the balance that we were trying to find. And I don't think it's an obvious answer on how we can be strategically cohesive, but at the same time, protect this freedom. And I think those teams operate based on the principles that I was describing to you. So they are all customer focused. So they do the customer intake, understand, create a value proposition, translate that into an MVP, then an MLP, and then we scale the product. We always try to balance the customer love with a clear business intent, right? So teams know what they are solving for. And that's how we operate. Now that we expanded to both Mexico and Colombia, we're also being very intentional about having code bases that can be extrapolated and used for the deploy of these features in other countries, not only in Brazil. It's the journey we've been on. And so this is also an important dimension of how we develop these products. We try to make them generalizable so that for us to launch a second and third country, it's a scalable way of producing products in code. Sure. Clearly it's

00:11:53 NICK LALL
Clearly it's working. And I definitely agree that if you have 7,000 employees, if you really want to keep innovating, you need to give them autonomy and decentralize things. You mentioned that part of why you took the role is that you love building teams. So I was wondering what your principles for building a team are and how you build teams so that they can be autonomous that way and that all 7,000 employees can be making their own decisions and innovating.

00:12:07 LIVIA CHANES
for building

00:12:16 LIVIA CHANES
So I think what I look for in a team, I would say it's a set of three characteristics. The first one, I look for people that are passionate and willing to learn. Because I think things move so fast and things change so much. In the industry and in the world in general, if we're honest, that unless people are really eager to keep learning and, you know, understanding how things could be better and listening to others' opinions, they fall flat very, very soon. And I also believe that interest and ability to learn is very correlated with resilience, which is also that I find to be very important in a world in which, you know, it's harder to compete, you know, you have to make mistakes and you're going to get deprioritized sometimes. And you just have to, you know, understand how to outlive those situations. So this is the first thing. The second thing is about when I look at the team structure, really creating a diversity of profiles so that the group becomes very strong in terms of ability. So I always like to have someone in my team that is stronger in analytics, someone that is stronger in product and engineering, right? Someone that is stronger in business sense, someone that is stronger in, you know, and of course we need people that are generalists that can, you know, have multiple conversations because the intrinsics of our work is multidisciplinary, but being intentional about putting people with different profiles to make the group more cohesive is important. Even in terms of leadership style, someone that is more like, yeah, you know, driven, someone that is more, okay, guys, let's think about people. So really try to balance this out so that, you know, I have a more balanced sounding board for the decisions that I make and for the peers that end up working together very closely. And the third thing that I learned over time is to staff people, especially when I'm talking about my direct reports, but I look at the characteristics in general, people that can say no to me, people that are brave, right? And they are courageous to step up and defending their points of view. I'm very opinionated, Nick. And I think that's a good thing but the failure mode of a leader like me is you know that people give up on pushing back on you and just end up doing whatever you tell them to do because it's easier so I need people who step up and you know put the boundaries and have strong opinions and are able to push back systematically. And, you know, that's a little bit more particular to me, but something that I learned, it's extremely important. And I value a lot that in my teams and I even keep pushing them. I say, guys, if you tell somebody that you're doing something just because I told you so, the first person who's going to criticize you is me. So stop saying that. You have to do stuff that you believe in. If you don't, you tell me, right? And I'll listen to you. But don't take my word for granted. Don't take anything I say by face value because I'm wrong sometimes. And your role here is to make my decisions better. If I just wanted to implement whatever I'm saying, I don't need you guys. I can have, you know, much more junior people working for me. That would be much easier. Sure. That's always a sign of a

00:15:27 NICK LALL
always a sign of a great leader, being able to disagree without ego or defensiveness. When it comes to sussing that out, whether the person's going to be able to do that, is there any way in interviews or hiring people that you're able to tell whether the person has that type of characteristic, that they're the type of person that you would want to be working for you? And how have you learned over the years to hire better employees? So

00:15:49 LIVIA CHANES
So look, I try to interview people by using real examples to the extent possible. I ask them to give examples about, you know, situations in which they don't know me, right, when I'm interviewing them. So they don't know, unless they listen to this podcast, they are not going to know what I'm looking for. So I typically say, well, tell me a situation in which, you know, you kind of had to do something you disagreed with. How did you react to that? And depending on how the person explains to me how he or she has dealt with the situation, you kind of get the cues of, you know, what they could be like in the workplace. So I like examples a lot. And I try to use that as much as possible. The other thing is that I also try to play a role in the interview, right? So they are telling me something I will explicitly disagree and say, look, no, I think this is bullshit. And I, you know, I think this is nonsense just to see how the person reacts to a very strong pushback. And that's also telling, right? You would be surprised that there are people that say, no, why are you saying so? You know, tell me more. So it's interesting how much people actually tell you about themselves without necessarily telling anything, right? Just by reading this body language and how they react and, you know, if they change their opinions or not, depending on how strong you put your point of view against them. So that's what I try. But I have to say, I think interviewing is just so hard. There's such great people that are terrible at interviews and vice versa that I think it's part of it. It's tough to just rely on that. But we try to, you know, to minimize the errors by using the tricks that we learn over time.

00:17:27 NICK LALL
Yeah, absolutely. It's definitely one skill to be good at an interview and not necessarily the same skill that is good at a job. But role playing is definitely shows how people think.

00:17:34 LIVIA CHANES
shows how

00:17:36 NICK LALL
think. And if they can give examples, it gives at least some idea of how the person may show up. So I think that's a great approach. Maybe switching gears a little I was wondering if you could talk a bit about NewBank's mission at least some idea bit, of how the person may show So I think that's a great Maybe switching up. approach. gears a little bit, I was wondering if you could talk a bit about NewBank's mission in Brazil and emerging markets and the sort of impact that has been made by giving consumers access to something like the solutions that you

00:17:57 LIVIA CHANES
you offer. So NewBank's mission is to fight complexity and empower people to have better financial lives or lives in general, depending on how we want to position it. And I think the impact that we managed to have in Brazil and now in the other Latin American countries as we expand is really, really massive. Today, Nubank has almost 55% of the Brazilian adult population as customers. And depending on the product that we look at, you know, 50%, 60% of those customers had access to that specific product for the first time in their lives. So that's pretty massive if you're talking about credit and how important credit is for the Brazilian economy, for example. Or even more sophisticated products like insurance, right? It used to be something that, you know, regular people in Brazil just don't have access to either because it's too expensive or it's too complicated for me to understand. It's not for me, right?

00:19:07 LIVIA CHANES
So it's pretty amazing to see how much we were able to accomplish in this past decade, in 11 years to be precise. But we still have a long way to even in Brazil. grow, Even if we have 55% penetration in the adult population, we continue to grow more than 1 million customers per month on average. It's more than 1 million customers per month on average. pretty amazing. It's pretty amazing. And we only capture 4% of the entire revenue pool of the financial industry. So in terms of market share, our product suite is very young, right? We just recently launched so many of them that there is a lot ahead for us to grow and increase in relevance in the customer's lives. If you look at the other countries, it's even more impressive. Both Mexico and Colombia are getting to growth curves that are even more sharper than the Brazil one, if compared back in the days, with higher levels of NPS. And this doesn't stop to surprise me how much, you know, demand we have still suppressed in those countries. If you look at, for example, the penetration of credit card in Mexico and in Colombia, it's a fraction of what it is in Brazil, right? So just by creating the opportunity for customers to access a very basic product, which is a credit card, right, for a Brazilian to say, right, it's not basic in most of the countries, but it's already transformational. And that's what we're trying to do to deploy the credit techniques and algorithms that we develop for Brazil and to leverage those for those markets that are underdeveloped in terms of credit offer. In addition to the other products that are digital account, the things that used to be basic in Brazil, now they're other mainstream, products that are digital account and things that used to be basic in Brazil. Now they're mainstream, but that are also proven to be very transformational in countries where cash is still very heavy, right? People don't have access. The unbanked population is much more important than it used to be in Brazil. So I think we're just in the beginning of that journey. Even if the numbers are so massive, I think we still see a lot of work to be done to really make this a more structural change in those markets. That's actually something that I was going to

00:20:48 NICK LALL
very transformational

00:20:55 NICK LALL
be in

00:21:06 NICK LALL
actually something that I was going to ask is that Brazil, when NewBank started, was kind of the perfect situation. You mentioned that there was low NPS scores and just a few large players. And I think also the regulatory environment actually made it more possible in Brazil. But I was wondering if in other emerging markets, you think that the trades are there in those countries as well, and that that same level of fast adoption could be possible for something like NewPay?

00:21:32 LIVIA CHANES
Yeah, I think, look, Brazil was a very sweet spot, right? It's a perfect combination indeed, because, you know, high profits, low NPS, and a regulator that was really keen on pushing competition, right? I think the Brazilian central bank has been extremely intentional in creating a more competitive environment for the country and also in pushing some tech innovations that favors players that are willing to embark in this journey, right? PIX, for example, which is the real-time transfer, money transfer that was implemented by central banks. It's massive in Brazil today in the open finance agenda that they've been pushing for to increase the transparency and provide better choices for customers, just to name two of them. So indeed, those trends were tailwinds for NewBank to grow. Having said that, when we look at the other emerging markets, it's not that different in terms of market structure. It's typically very concentrated in a few players. It's typically a low NPS industry. If you talk about the mass market customers, typically banks are going to be extremely intentional and serve affluent people very well, but not so much the big chunk of the population. And I think what's different from Brazil and most of the emerging markets is the fact that credit is so underdeveloped. Brazil has historically had a very well-developed, relatively speaking, credit market. a very well-developed, relatively speaking, credit market. Even if, for sure, NewBank managed to expand that pie, introducing a new perspective on credit management was pretty standard in Brazil. You can pay installments, you know, it's very much part of the economy, which is not the same in the other countries, right? As I mentioned, the credit card penetration is low. You typically really don't get access to formal credit lines. It's cumbersome. You have to go to branches or they're very intricate products that make it so expensive for banks to provide that to customers that then the underserved customers not get access to it. The payback on deposits typically very low as well. So it's an inefficient industry when you look at how different customer satisfaction and profitability really is. I think this is true to most of the countries. Of course, countries have specificities that we need to work around and they probably need some adaptations versus Brazil structure, very strategy, right? Let me take two examples of the countries we are currently serving. Well, in Mexico, the relative importance of cash in Mexico is much more important than Brazil, where pigs swore, the money is digitized. So, you know, how do we solve for that? As I mentioned, credit card penetration is low, POS penetration is low. So, you know, it's a different ecosystem. We need to work around that. In Colombia, we have the usura, the caps in interest rates, right? So the credit underwriting itself needs to be thought through in a different perspective. How do we product to make ends meet and still have that level of customer love, even though we have other constraints to solve for? And in the regulatory framework, it's something that is pretty unique to countries as well. But if in Brazil, we had some tailwinds of the moment the market was in the agenda of the central bank back in the days, I think today we have so much more knowledge on how to have these conversations and so many more resources as a company that we're better positioned to overcome those blockers and these new kinds of challenges. So seeing, I think, from a business model perspective, not that difference, regulation is always very unique, you know, and we have to live with it. We are within a regulated industry, right? That's part of the game. So we learned over time how to navigate those uncertainties. Sure. I'm sure with the experience in

00:25:14 NICK LALL
with the experience in Brazil, it's relatively easy to take advantage of the opportunities everywhere, even though I'm sure each market is different and will require slightly different approaches. One other question I have is that you're from Brazil, you went to INSEAD, you came back to Brazil, and you've clearly been very successful. I was curious if you have any advice for INSEAD students who are either from emerging markets or want to work in them, and they want to have the sort of career that you have. What advice would you give to someone who is hoping to do something like this?

00:25:42 LIVIA CHANES
So INSEAD has been extremely important in my overall formation as a person, I would say, and of course, as a professional, I think I've always been very passionate about, you know, different people and a global mindset, right, since I was a kid. So going there and being able to experience that with brilliant people from all over the world was a life changingchanging experience to me in terms of enriching my perspectives and understanding, you know, how different things were and, you know, different challenges of different countries and different cultures. So it was very transformative to me personally, but it was also extremely important for me because it made me realize that I really wanted to make a difference in my country and you know I typically say you know I could be working anywhere in the world it's a choice for me to be in Brazil and to be in Latin America and I make that choice because unless people like you know us make that choice, we're going to just be living so much of the opportunity to transform these economies on the table, that we need to make ourselves protagonists of that, if we really care about it. It's not that we could not have global impact, I think we can, if you look at NewBank, right, we built it in Brazil, and now we're exporting it to, you know, at least two countries, and's already massive right at the global scale. But we can do great stuff in emerging markets because we do have great people and the opportunities are just so massive. We just need to take a chance. It's very hard, right? We have political instability. We have, you know, regulatory asymmetry. We have, you know, inefficiencies of all sorts. But at the same time, there's just so much low hanging fruit to be captured. And I think the privilege that we have, you know, by getting access to an education like in-sad level education and getting to know people and have the network that we have also puts us in a position that, you know, we need to give back to society somehow. It doesn't need to be in the public sector. It doesn't need to be in the private sector. I think each individual will find its way to do it. This was my way to do it, right? I decided to stay here and to raise my kids in Brazil and to try to do something great here that could be a global case. And I was very lucky to meet New Bank in my way and to have this opportunity. But, you know, that's my main personal reflection. And I've lived abroad before INSEAD. I spent some time in Europe. I also spent some time in Singapore when I was at INSEAD. I love traveling. I think one of my passions is to get to know people. But, you know, when I look back, I do not regret. I think I'm very proud of the positive impact that we can make in our own home countries.

00:28:35 NICK LALL
Beautiful. And I think that is where the opportunity in the world is also going forward. That's where the humans are going to be living is mostly in these emerging markets. And there's so much that can be done. So always great to connect with people like you who have done such great And there's things. so much that can be So always great done. to connect with people like you who have done such great things. So thank you so much for joining us, Livia. Really appreciate you being on the podcast. This was an absolute pleasure.

00:28:51 LIVIA CHANES
Thank you, Nick. Thanks for having me.