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• Case | HBS Case Collection | August 2020

  Nubank: Democratizing Financial Services

  Michael Chu, Carla Larangeira and Pedro Levindo

  Nubank, a wholly-digital solution created to disrupt Brazilian banking, with 6 million clients and a $4 billion valuation after five years, must decide whether to expand to Mexico. The company was founded in Sāo Paulo in 2013 by Colombian-born David Vélez to seize what he saw as the opportunity latent in a banking system long dominated by five large incumbents with what he considered low value products and deficient customer service. The answer for Vélez was through technology. Backed by foreign venture capitalists and recruiting a top team, Vélez launched a credit card available solely through a smartphone app, with quick approval and no annual fee, with credit and payments totally online and transparent, friendly customer service, completely up-ending the traditional terms of the market. Nubank’s credit card became viral among the Brazilian urban middle-class and by the end of 2018, the company was the fifth credit card issuer in Brazil with over 6 million cardholders. A second product, a digital banking account, also changed market terms by offering services at no fees and yielding higher interest rates. By 2018, Nubank had $628.8 million in deposits. With success, a multitude of opportunities were now open and Nubank and its board must define strategic priorities. Within Brazil, Nubank’s market share was still minor compared to the incumbents, and there were many other financial products that could be launched. In addition, 30% of Brazilians remained unbanked. Yet Vélez and his team were convinced that the whole of Latin America had the same banking pain points as Brazil and was ripe for Nubank products. For Vélez, the gateway to unlocking that potential was through Mexico. The case also examines the challenges in an emerging market of financing and developing a new business concept based on cutting-edge technology, the nature and sustainability of the difference between a fintech startup and leading incumbents, and the role of regulators in the development of fintech.

  Keywords: fintech; Financial inclusion; digital banking; Credit Cards; Credit Cards; South America; Brazil; North America; Mexico;

  Citation:

  Chu, Michael, Carla Larangeira, and Pedro Levindo. "Nubank: Democratizing Financial Services." Harvard Business School Case 321-068, August 2020.  View Details

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• Case | HBS Case Collection | October 2019 (Revised January 2020)

  Nehemiah Mfg. Co.: Providing a Second Chance

  Michael Chu, Brian Trelstad and John Masko

  In 2009, Dan Meyer and Richard Palmer, two veterans of the fast-moving consumer goods (FMCG) industry, founded Nehemiah Manufacturing to build FMCG brands while providing jobs to Cincinnati, Ohio’s beleaguered urban core. Two years later, the pair made their first “second-chance” hire of a convicted felon, a successful experiment that would grow to define the company. By 2019, Nehemiah’s factory floor, as well as several supervisory and management positions, would be staffed by ex-offenders. With a robust net of social support services and a non-profit foundation for training peer companies in how to hire second-chance employees, Meyer and Palmer advocated using second-chance hiring to decrease turnover and create staff loyalty. This case deals with the challenges and opportunities associated with growing a manufacturing company while prioritizing a social mission and enables students to evaluate the potential of second-chance hiring programs.

  Keywords: Social Entrepreneurship; Retention; Selection and Staffing; Employment; Human Capital; Growth Management; Brands and Branding; Social Marketing; Mission and Purpose; Prejudice and Bias; City; Urban Scope; Consumer Products Industry; Manufacturing Industry; Ohio; United States;

  Citation:

  Chu, Michael, Brian Trelstad, and John Masko. "Nehemiah Mfg. Co.: Providing a Second Chance." Harvard Business School Case 320-008, October 2019. (Revised January 2020.)  View Details

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• Case | HBS Case Collection | March 2019 (Revised May 2019)

  GENTERA: Facing the Digital Age

  Michael Chu and Carla Larangeira

  After long dominating Mexican microfinance, Compartamos Banco faces the emergence of fintech, just as for the first time its loan portfolio and clients have declined. Enrique Majós, CEO of GENTERA, the bank´s parent company, is keenly aware of the profound changes since the Compartamos IPO in April 2007, when it was valued at $1.5 billion and became the first bank wholly dedicated to microfinance to be quoted in a major stock exchange. Since then, the market has become intensely competitive, with both large established institutions and new entrants vying for the same customers. Simultaneously, the digital era has spawned fintech, threatening to disrupt Compartamos’ highly successful model but also providing opportunities for the bank to reshape it. While challenged to manage key innovation within a leading incumbent, Majós must consider whether to commit his team to a major cost reduction in the next few years to his board of directors at their next meeting at the end of the month.

  Keywords: Micro Finance; base of the pyramid; fintech; Microfinance; Disruption; Innovation and Management; Competitive Strategy; North America; Mexico;

  Citation:

  Chu, Michael, and Carla Larangeira. "GENTERA: Facing the Digital Age." Harvard Business School Case 319-092, March 2019. (Revised May 2019.)  View Details

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