Nubank is taking its first tentative steps into the mobile network space as the NYSE-listed Brazilian neobank launches an embedded SIM (eSIM) service for travelers. The service allows customers to access 10GB of free roaming internet in over 40 countries without having to replace their existing physical SIM card or eSIM.
The launch comes shortly after news first broke that Brazil's National Telecommunications Agency (ANATEL) was quietly planning to partner with wireless giant Claro to turn Nubank into a mobile virtual network operator (MVNO). The plans are still in the early stages, and Nubank hasn't confirmed launch details (the company also declined to comment for this article), but we can now confirm that it's at least inching its way into the mobile network space. Fintech club.
From Neobank to NeoMVNO
Neobanks, a new type of financial institution that acts as a digital challenger to traditional banking, follow in the footsteps of traditional banks by offering ancillary services targeting new customers, such as budgeting tools, data and spending insights, and easy access. . stock market. While neobanks have surged in popularity, the mobile virtual network operator (MVNO) market has also grown in popularity, driven by the rise of eSIMs, the cloud, and the proliferation of third-party software that enables fully digital distribution strategies.
Nubank is at the intersection of these trends.
The 10-year-old Brazilian company has recently been in a slump. The company's value has surged nearly 170% over the past year, hitting an all-time high of $58 billion in March. The company went from a net loss of $9 million in 2022 to a net profit of $1 billion last year. This trend continued in 2024, with record sales in the first quarter and net income more than doubling from the corresponding period the previous year. Nubank has also surpassed 100 million customers in its core markets of Brazil, Mexico and Colombia, operating a range of services including bank accounts, credit cards, loans, insurance, investments and now mobile data services for travelers.
The new service is aimed at customers of Nubank Ultravioleta, a premium subscription that comes with benefits such as insurance, higher credit limits, cashback, family accounts and more.
Last month, Nubank said it would enter the travel sector with the imminent launch of a new “global account”, partnering with European fintech Wise to offer low-cost international money transfer services to Ultravioleta subscribers. As part of this, the company is currently launching an eSIM service for users with compatible smartphones that offers 10GB of data for travelers in the United States, Latin America, and Europe. eSIM is activated through the Nubank app, with the underlying infrastructure supported by Gigs, a platform that provides everything a budding mobile network provider needs through a single API. It's basically what Stripe has been doing in finance, but applied to cell phone plans.
Gigs is backed by Google's early venture capital arm, Gradient Ventures, and Uber CEO Dara Khosrowshahi, among others.
“Mobile plan bundles represent a powerful means for neobanks to convert casual users into monthly paying subscribers, encourage upgrades to premium features, and create an ecosystem where the bank acts as a hub for a variety of value-added services.” said Hermann, Gigs co-founder and CEO. Frank told TechCrunch.
The repercussions of Nubank’s launch go elsewhere in the fintech race. Last February, Revolut, a $25 billion British neobank, launched a similar eSIM service for its premium subscribers. And last year, Indian neobank Zolve announced that not only could immigrants set up banking before arriving in the United States; Mobile service is also available upon arrival.
This highlights the synergies between financial services and mobile communications. Although both are essential for people to function today, both have traditionally had similar obstacles, especially for those arriving in the country for the first time. We've seen carriers launch banking services, like T-Mobile launching banking services in the US with T-Mobile Money. Meanwhile, traditional banks also went in a different direction. This can be seen in the fact that Brazil's Banco Inter and South Africa's Standard Bank have both launched them. We provide our own MVNO service.
“Today, our banking interactions already focus on mobile phone numbers for banking or security verification purposes,” Allan T. Rasmussen, a telecom industry consultant, analyst and MVNO expert, explained to TechCrunch. “Mobile carriers are trying to enter the banking industry and become banks themselves, and traditional banks and fintech companies are doing the same by becoming MVNOs.”
However, neobanks in particular have synergies with MVNOs. Both are “virtual” and technology plays a big part in their respective services, often with online support and account access only. Additionally, both are touted as having low overhead, which allows them to be more agile and less expensive than incumbents. And, as seen with Revolut and now Nubank, eSIMs are further driving this cross-pollination as they compete for mindshare, revenue, and access to customer data and touchpoints.
“To be successful as an MVNO, you need a distribution channel. That’s the first test of pitching to operators,” James Gray, managing director at communications industry consultancy Graystone Strategy, told TechCrunch. “Banks already have this through their premium banking, websites and apps. But Revolut's recent moves – and I suspect there will be other neobanks in the future – are interesting. Because these are not traditional organizations. Their mission is to challenge the status quo and they are doing this very successfully in banking. So what about banking telecom convergence? “They have the channel and the brand power.”
MVN… no?
One small problem: The neobank isn't really positioning itself as an MVNO with its new travel eSIM service. “Rather than becoming an MVNO, Revolut has partnered with 1Global to consolidate many MVNO and roaming access contracts into a single network, building the global presence of a leading carrier,” a Revolut spokesperson told TechCrunch in February.
An MVNO is an independent mobile service built on top of a carrier's infrastructure and offers a variety of Mobile Virtual Network Enablement Programs (MVNEs) and Integrated Services (MVNAs) that help companies launch mobile networks and handle SIM provisioning, billing, etc. Example: 1Global). good night. Although Revolut does not offer voice and SMS or assign phone numbers, it still relies on carrier infrastructure through MVNEs to offer its own branded mobile data services. This is very similar to Revolut becoming an MVNO.
However, calling yourself an MVNO may invite additional regulatory oversight. Banks are already subject to strict regulation as financial institutions, but if they are classified as telecommunications companies, they will likely be subject to additional regulatory obligations. This is an ongoing phenomenon in the United States. The Federal Communications Commission (FCC) is trying to determine whether connected cars should be classified as MVNOs, following a New York Times report on how connected cars are being used by abusive operators. Partner tracking down victims.
Nubank is actually preparing to launch its MVNO service domestically in Brazil, but its partnership with Gigs makes it simpler to bring its travel eSIM service to market. This is because the partner assumes all the compliance complexities that come with that location.
“Telecommunications is a highly regulated industry in every country. The core of Gigs' end-to-end value proposition is that we abstract all regulatory complexity for our customers,” said Frank. “For this purpose, Gigs almost always acts as a licensed conduit of record. This means that the burden of compliance falls on Gigs, not the customer. This allows our customers to launch their own mobile services without having to legally become a provider in a regulated industry.”
