Nubank Discusses Credit Underwriting Differentials: Tech, Governance, and Customer Focus

Youssef Lahrech, president, and Ravi Prakash, VP of Risk Management, talk about the unique combination of curing-edge technology, large volumes of data, and agility to offer competitive rates to its customers

SÃO PAULO--(BUSINESS WIRE)--Nubank's credit strategy is characterized by technological agility, large-scale data analysis, customized risk management, innovation, and high levels of satisfaction. This unique combination allows the company to offer competitive rates to its more than 90 million customers and maintain a strong performance in credit, with NPL rates better than the industry average, even in challenging economic conditions.

This is how Youssef Lahrech, President and COO, defined Nubank's credit operation in an interview with Jörg Friedemann, Investor Relations Officer and Senior Director of Market Intelligence, in the second episode of the Nu Videocast (full episode here). Alongside Ravi Prakash, Vice President of Risk Management, the executive explained that these factors, combined with a risk philosophy guided by data and artificial intelligence, enable real-time credit decisions to be made at an individual level.

"When we think about credit underwriting, our goal is to combine the best of tech and banking. The combination of these components – technology, governance, a very disciplined approach, obsessive focus on the customer, and fostering this fanatical customer love – is unusual but very powerful, and that gives us a unique competitive advantage in the space," says Lahrech.

Tech and innovation at the forefront

Nu's native digital infrastructure and proprietary technology are some of its main differentiators compared to traditional banks and fintechs, as they enable rapid implementation and interaction of credit models, offering a significant advantage in terms of speed and cost savings.

Prakash also highlights Nu's "low and grow" strategy, where customers start their journey with credit limits that gradually increase based on positive payment behavior.

The company also stands out when it comes to renegotiation, with customers in this process registering NPS in the 70 to 80 score range. According to Prakash, this is due to the effort to empower the customer and personalize their experience, making them capable of managing their financial situation, including renegotiations: "More than 50% of our customers in renegotiations are either current or less than 15 days past due. It's good for the customer, it's good for Nubank," he emphasizes.

Nu has been growing its credit portfolio, namely through secured products like payroll loans. The company sees a wide avenue for growth in this landscape and views innovations like Open Finance as opportunities to offer even better products and services to its customers in the future.

Nu Videocast

For a deep dive into Nubank’s credit strategy, watch the full episode of the Nu Videocast here.