Nubank, the Brazilian neobank, is venturing into the mobile network space with the introduction of an eSIM service for travelers. The service allows customers to access 10GB of free roaming internet in over 40 countries without the need to change their physical SIM card or eSIM. This move comes after Nubank received approval from Brazil’s National Telecommunications Agency to become a mobile virtual network operator (MVNO) in partnership with Claro, a wireless giant.
Neobanks, which are digital-native financial institutions that challenge traditional banks, have been expanding their offerings to attract new customers. This includes providing budgeting tools, data and spending insights, and stock market access. At the same time, there has been a rise in the MVNO market due to advancements in eSIM technology and cloud-based platforms that simplify all-digital distribution strategies.
Nubank is capitalizing on these trends. The company’s valuation has surged by around 170% in the past year, reaching a record high of $58 billion in March. It has also seen significant financial growth, with a net profit of $1 billion in 2023 and record revenues in Q1 of 2024. Nubank currently serves over 100 million customers in Brazil, Mexico, and Colombia, offering various services such as bank accounts, credit cards, loans, insurance, investments, and now a mobile data service for travelers.
The eSIM service is targeted at customers of Nubank Ultravioleta, a premium subscription that offers additional benefits like insurance, higher credit limits, cashback, and family accounts. Last month, Nubank announced its entry into the travel sector with the upcoming launch of a “global account” in partnership with Wise, a European fintech. As part of this expansion, Nubank is launching an eSIM service for compatible smartphones, providing 10GB of data for travelers in the U.S., Latin America, and Europe. The eSIM can be activated through the Nubank app, with the underlying infrastructure powered by Gigs, a platform that simplifies mobile network provision.
The convergence of financial services and mobile communications is evident in the strategies of neobanks and MVNOs. Both operate virtually, leveraging technology to offer online support and account access. They also have lower overhead costs, allowing them to offer competitive prices compared to traditional banks. The introduction of eSIM technology further strengthens this synergy, enabling neobanks like Nubank and Revolut to expand their services, attract customers, and gather valuable data.
While neobanks like Revolut and Nubank are not positioning themselves as MVNOs with their new eSIM services, they rely on carrier infrastructure through partnerships with MVNEs (mobile virtual network enablers) to offer mobile data services. Calling themselves MVNOs could subject them to additional regulatory oversight, as the telecommunications industry is heavily regulated. However, Nubank’s partnership with Gigs allows them to bring the eSIM service to market more easily, as Gigs handles the regulatory compliance complexities.
In conclusion, Nubank’s foray into the mobile network space through its eSIM service reflects the growing trend of neobanks expanding their offerings and the increasing integration of financial services with mobile communications. By leveraging eSIM technology and partnering with Gigs, Nubank aims to provide a seamless and convenient mobile data service for its customers while avoiding excessive regulatory burdens. This move further solidifies Nubank’s status as a leading player in the fintech industry and demonstrates its commitment to offering innovative solutions to its customers.
