Brazilian Neobank Nomad expands investment portfolio and goes into credit

October 18, 2022
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Nomad, a fintech that seeks to facilitate the access of Brazilians to a global financial life, started by offering banking solutions as well as foreign exchange services and international remittances.

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Nomad, a fintech that seeks to facilitate the access of Brazilians to a global financial life, started by offering banking solutions - a dollar account and a debit card accepted in more than 50 countries, with the right to withdraw and transfer money - as well as foreign exchange services and international remittances. The company then expanded its operations with the creation of an investment platform, which has been expanded in recent months.

With approximately 1 million downloads and 500,000 open accounts, of which around 200,000 are customers who have already made transactions on the platform, Nomad expects to have between 1 and 2 million accounts by next year. The fintech is preparing to enter the credit market and will also launch local currency products, reveals Lucas Vargas, CEO of the company, in conversation with Finsiders.

Nomad was founded in 2019 by entrepreneurs Patrick Sigrist (founder of iFood), Eduardo Haber (who founded the managers Advis and Tribeca Partners) and Marcos Nader (ex-DocuSign). Lucas took over as CEO in March 2021, after having worked for more than eight years at Grupo ZAP, three of them as CEO.

There are developments that go through credit and installment plans, and we are working with some partners to launch these credit products next year," says the executive, citing the case of 'buy now, pay later' (BNPL) - a modality popularized abroad and that is nothing more than a reinvention of the very Brazilian "installment plans without cards".

This would also be one of the strategies for the fintech to expand its revenue lines, in a context where startups in general have been increasingly pressured by profit and cash generation, instead of growth at any cost.

In August, Nomad itself had to make a staff cut to face the turbulent scenario. The staff reduction was surprising because the fintech had raised in May a US$ 32 million round, being valued at more than R$ 1 billion. At the time, the even cited that part of the resource would be allocated for the expansion of the operation and the increase of the team.

"In 2019, we had raised $2.5 million. In 2020, we raised another $5 million. Last year, we raised $20 million, and finally, the $32 million this year. We were counting on raising another check in 2023. As the market turned, we decided to be more cautious and extend the 'runway'," Lucas acknowledges. "We continue to grow the base and develop new products, focusing on profitability," he adds.

According to Caio Fasanella - who arrived at Nomad in February of this year to lead investments and, since August, took over as Chief Revenue Officer (CRO) -, currently the monetization fronts are the service fee on exchange operations and the interchange fee (TIC) for card transactions. The company does not charge fees for opening and maintaining the account, nor does it charge for investment brokerage.


Portfolio evolution

In a recent move to expand the investment portfolio, Nomad launched last week what it has called selected funds. Basically, there are three ETFs according to the investor's risk profile (careful, balanced and aggressive), plus a fixed income index fund - all managed by BlackRock, the world's largest asset manager, with about $8 trillion under its care.

Nomad has more than 800 assets available, including stocks and ETFs traded on US exchanges (Nyse and Nasdaq), as well as some US real estate funds (known as REITs). There are options with investments starting at US$ 1, including the new mode of selected funds. The amount must be invested during the hours that the US financial market is open.

In addition to expanding the investment shelf, the fintech has also been devoting more attention to the non-financial products and services vertical, today practically "hidden" as a benefits section in the app's "profile" tab. "We are strengthening this shopping part, within the context in which we have more and more data," explains Caio. In total, there are about 30 partners currently, including large retailers like Amazon, car rental companies, and lodging platforms like Hoteis.com.

The creation of financial products and services in local currency is another front to be explored by Nomad. "We already have a wallet in reais, and we should have associated products, such as payments," says Lucas. The idea is not to compete with well-established digital banks in Brazil, such as Nubank, C6 and Inter, but to add solutions that complement the value proposition of the company's global platform.


Partners

To run the U.S. bank account solution for Brazilians, Nomad has partnered with Evolve Bank & Trust and uses Synapse's banking as a service (BaaS) infrastructure. The foreign exchange operations are performed by Banco Ourinvest, for which Nomad is a foreign exchange correspondent.

In the case of the investment platform, like other players, the fintech has an agreement with a local distributor (FRAM Capital DTVM), in accordance with CVM guidance opinion 33, of September 30, 2005. In the United States, where Nomad is registered as an investment advisor, operations are done in partnership with the broker DriveWealth.


Market

Nomad is not the only one to offer global account and investment solutions in the US for Brazilians. British neobank Revolut, for example, brought in Glauber Mota, ex-BTG Pactual, to lead the Brazilian operation of the super app, which will start with a global account, with access to more than 25 currencies and an international card accepted in 150 countries. The product is about to be launched.

The also British company Wise has been expanding its operations in Brazil and at the end of last year launched an international card. In a recent interview to Finsiders, Pedro Barreiro, the company's banking and expansion leader in the country, said that the expectation is to exceed 100 people in the local team by the third quarter of 2023.

There is no shortage of examples of neobanks and fintechs willing to capture the Brazilian who has his eye on the international market, whether to travel or to invest his rich money. The players include C6 Bank, Inter, Avenue Securities (invested by Itaú), Passfolio, Stake, Broad, and others.

Original Article in Finsiders

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

Nomad, a fintech that seeks to facilitate the access of Brazilians to a global financial life, started by offering banking solutions - a dollar account and a debit card accepted in more than 50 countries, with the right to withdraw and transfer money - as well as foreign exchange services and international remittances. The company then expanded its operations with the creation of an investment platform, which has been expanded in recent months.

With approximately 1 million downloads and 500,000 open accounts, of which around 200,000 are customers who have already made transactions on the platform, Nomad expects to have between 1 and 2 million accounts by next year. The fintech is preparing to enter the credit market and will also launch local currency products, reveals Lucas Vargas, CEO of the company, in conversation with Finsiders.

Nomad was founded in 2019 by entrepreneurs Patrick Sigrist (founder of iFood), Eduardo Haber (who founded the managers Advis and Tribeca Partners) and Marcos Nader (ex-DocuSign). Lucas took over as CEO in March 2021, after having worked for more than eight years at Grupo ZAP, three of them as CEO.

There are developments that go through credit and installment plans, and we are working with some partners to launch these credit products next year," says the executive, citing the case of 'buy now, pay later' (BNPL) - a modality popularized abroad and that is nothing more than a reinvention of the very Brazilian "installment plans without cards".

This would also be one of the strategies for the fintech to expand its revenue lines, in a context where startups in general have been increasingly pressured by profit and cash generation, instead of growth at any cost.

In August, Nomad itself had to make a staff cut to face the turbulent scenario. The staff reduction was surprising because the fintech had raised in May a US$ 32 million round, being valued at more than R$ 1 billion. At the time, the even cited that part of the resource would be allocated for the expansion of the operation and the increase of the team.

"In 2019, we had raised $2.5 million. In 2020, we raised another $5 million. Last year, we raised $20 million, and finally, the $32 million this year. We were counting on raising another check in 2023. As the market turned, we decided to be more cautious and extend the 'runway'," Lucas acknowledges. "We continue to grow the base and develop new products, focusing on profitability," he adds.

According to Caio Fasanella - who arrived at Nomad in February of this year to lead investments and, since August, took over as Chief Revenue Officer (CRO) -, currently the monetization fronts are the service fee on exchange operations and the interchange fee (TIC) for card transactions. The company does not charge fees for opening and maintaining the account, nor does it charge for investment brokerage.


Portfolio evolution

In a recent move to expand the investment portfolio, Nomad launched last week what it has called selected funds. Basically, there are three ETFs according to the investor's risk profile (careful, balanced and aggressive), plus a fixed income index fund - all managed by BlackRock, the world's largest asset manager, with about $8 trillion under its care.

Nomad has more than 800 assets available, including stocks and ETFs traded on US exchanges (Nyse and Nasdaq), as well as some US real estate funds (known as REITs). There are options with investments starting at US$ 1, including the new mode of selected funds. The amount must be invested during the hours that the US financial market is open.

In addition to expanding the investment shelf, the fintech has also been devoting more attention to the non-financial products and services vertical, today practically "hidden" as a benefits section in the app's "profile" tab. "We are strengthening this shopping part, within the context in which we have more and more data," explains Caio. In total, there are about 30 partners currently, including large retailers like Amazon, car rental companies, and lodging platforms like Hoteis.com.

The creation of financial products and services in local currency is another front to be explored by Nomad. "We already have a wallet in reais, and we should have associated products, such as payments," says Lucas. The idea is not to compete with well-established digital banks in Brazil, such as Nubank, C6 and Inter, but to add solutions that complement the value proposition of the company's global platform.


Partners

To run the U.S. bank account solution for Brazilians, Nomad has partnered with Evolve Bank & Trust and uses Synapse's banking as a service (BaaS) infrastructure. The foreign exchange operations are performed by Banco Ourinvest, for which Nomad is a foreign exchange correspondent.

In the case of the investment platform, like other players, the fintech has an agreement with a local distributor (FRAM Capital DTVM), in accordance with CVM guidance opinion 33, of September 30, 2005. In the United States, where Nomad is registered as an investment advisor, operations are done in partnership with the broker DriveWealth.


Market

Nomad is not the only one to offer global account and investment solutions in the US for Brazilians. British neobank Revolut, for example, brought in Glauber Mota, ex-BTG Pactual, to lead the Brazilian operation of the super app, which will start with a global account, with access to more than 25 currencies and an international card accepted in 150 countries. The product is about to be launched.

The also British company Wise has been expanding its operations in Brazil and at the end of last year launched an international card. In a recent interview to Finsiders, Pedro Barreiro, the company's banking and expansion leader in the country, said that the expectation is to exceed 100 people in the local team by the third quarter of 2023.

There is no shortage of examples of neobanks and fintechs willing to capture the Brazilian who has his eye on the international market, whether to travel or to invest his rich money. The players include C6 Bank, Inter, Avenue Securities (invested by Itaú), Passfolio, Stake, Broad, and others.

Original Article in Finsiders

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.
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