Nubank is venturing into the mobile network arena by introducing an eSIM (embedded SIM) service for travelers. The Brazilian neobank, listed on the NYSE, will offer customers 10GB of free roaming internet in over 40 countries without the need to swap out their existing physical SIM card or eSIM.
This move follows the approval from Brazil's National Telecommunications Agency (ANATEL) for Nubank to potentially become a mobile virtual network operator (MVNO) in collaboration with Claro, a major wireless provider. While details of the official launch are yet to be confirmed by Nubank, the company's foray into the mobile network space signals a trend within the fintech industry.
From Neobanks to Neo-MVNOs
Neobanks, digital-native financial institutions challenging traditional banks, are expanding their services to attract new customers. Similarly, the MVNO market is growing due to factors like eSIM technology and cloud-based solutions, making all-digital distribution strategies more accessible.
Nubank is positioned at the convergence of these trends.
The Brazilian company, founded 10 years ago, has seen significant growth, with its valuation increasing by around 170% in the past year to reach $58 billion in March. Nubank reported a shift from a $9 million net loss in 2022 to a $1 billion net profit in the previous year. With over 100 million customers in Brazil, Mexico, and Colombia, Nubank offers various financial services, including bank accounts, credit cards, loans, insurance, investments, and now a mobile data service for travelers.
The new service targets Nubank Ultravioleta customers, a premium subscription launched three years ago, offering benefits like insurance, higher credit limits, cashback, and family accounts.
Recently, Nubank announced its entry into the travel sector with plans to introduce a new 'global account' in partnership with European fintech Wise, providing Ultravioleta subscribers with low-fee international money transfers. As part of this initiative, the company is launching an eSIM service for compatible smartphones, providing 10GB of data for travelers in the U.S., Latin America, and Europe. The eSIM activation is done through the Nubank app, supported by Gigs, a platform simplifying mobile network services through a single API, akin to what Stripe offers in finance.
Gigs is backed by investors like Google's Gradient Ventures and Uber CEO Dara Khosrowshahi.
Nubank's move aligns with similar strategies in the fintech sector. In February, U.K.-based neobank Revolut introduced an eSIM service for premium users, while Indian neobank Zolve integrated mobile network services into its offerings for immigrants to set up banking and mobile services seamlessly.
The connection between financial services and mobile communications is crucial, as both are essential for daily functioning. This synergy has led to carriers offering banking services and banks providing mobile services, blurring the lines between the two industries.
MVN... No?
Despite offering travel eSIM services, neobanks like Revolut don't classify themselves as MVNOs. Instead, they partner with MVNO enablers to access carrier infrastructure. Becoming an MVNO could bring additional regulatory requirements, as seen in the U.S. with the FCC examining the classification of connected cars as MVNOs.
While Nubank plans to launch an MVNO service in Brazil, its travel eSIM service benefits from a partnership with Gigs, which handles regulatory compliance complexities. Gigs acts as the licensed carrier of record, ensuring that customers can launch mobile services without legal hurdles.
Overall, the collaboration between neobanks and MVNOs showcases the evolving landscape of financial and mobile services, driven by technology and customer-centric approaches.