Nubank is taking its first tentative steps into the mobile network space as NYSE-traded Brazilian neobank rolls out an eSIM (embedded SIM) service for travelers. The service will give customers access to 10GB of free internet roaming in more than 40 countries without having to deactivate their own physical SIM or eSIM.
The release comes shortly after the news first appeared that the National Telecommunications Agency of Brazil (EAST) quietly had plans for Nubank to become a mobile virtual network operator (MVNO) in partnership with the wireless giant Sure. While this plan remains in the early stages and Nubank has not confirmed any of the launch details (the company also declined to comment for this article), we can now confirm that it is at least in the realm of the mobile network – a growing trend within the fintech fraternity.
From neo-banks to neo-MVNOs
Neobanks — a new breed of financial institutions that serve as digitally native challengers to established banking institutions — are following in the footsteps of traditional banks by offering ancillary services to target new customers, such as budgeting tools, data and spending information, and easy access to the stock market. While the neobanks have soared In popularity, so has the MVNO (mobile virtual network operator) market, driven by the rise of eSIM, the cloud and the proliferation of third-party software that makes all-digital distribution strategies stand out.
Nubank is at the intersection of these trends.
The 10-year-old Brazilian company has been a laggard in recent years, its valuation rising about 170% in the past year and hitting an all-time high of $58 billion in March. The company retreated from a net loss of $9 million in 2022 in net profits of $1 billion last yeara trend that continues in 2024 with record revenue in Q1 and net profits more than doubled the corresponding period of the previous year. Nubank also passed 100 million customers across its key markets of Brazil, Mexico and Colombia, where it operates a range of services including bank accounts, credit cards, loans, insurance, investments and — now — mobile data service for travelers.
The new service is aimed at its customers Nubank Ultravioletaa premium subscription it released three years ago with group benefits like insurance, higher credit limits, cash back, family accounts and more.
Last month, Nubank revealed it was entry into the travel sector with the upcoming launch of a new ‘global account’, partnering with European fintech Wise to offer Ultravioleta subscribers low-fee international money transfers. As part of this, the company is now launching an eSIM service for those with compatible smartphones, with 10GB of data for travelers in the US, Latin America and Europe. The eSIM is activated through the Nubank app, with the underlying infrastructure powered by Concertsa platform that gives budding mobile network providers everything they need through a single API — basically what Stripe did in finance, but for mobile plans.
Gigs is backed by the likes of Google’s early-stage venture capital arm Gradient Ventures and Uber CEO Dara Khosrowshahi.
“The bundling of mobile plans represents a powerful driver for neobanks to convert non-regular users into monthly subscribers, encourage upgrades to premium features and create an ecosystem where banking acts as a hub for multiple value-added services,” co-founder and CEO of Gigs. Herman Frank he told TechCrunch.
The impact of Nubank’s launch is moving elsewhere in the fintech fray. In February, Revolut — a 25 billion dollars UK neobank — launched a similar eSIM service for premium subscribers. And last year, Indian neobank Zolve too mobile networks added to its arsenal of services so that immigrants can not only have their banks established before arriving in the US, but have cell phone service also ready upon arrival.
This highlights the synergies between financial services and mobile communications — both are essential to how people function today, but both have traditionally had similar barriers, particularly for those arriving in a country for the first time. We have seen carriers launching banking services as T-Mobile has done in the US with T-Mobile Moneywhile traditional banks have also moved in the other direction, proved by the Brazilian Banco Inter and Standard Bank in South Africa both have started their own MVNO services.
“Our banking interaction today is already focused on our mobile number, whether for banking transactions or security checks. Allan T. Rasmussen, a telecom industry consultant, analyst and MVNO expert explained to TechCrunch. “Mobile operators are moving into the banking industry, trying to become banks themselves, and traditional banks and fintechs are doing the same by becoming MVNOs.”
But neobanks, in particular, are synergistic with MVNOs: they are both “virtual,” with technology playing a large role in their respective offerings, often with only online support and account access. They are also marketed as having lower overhead, which gives them more flexibility and the ability to offer lower prices than the incumbents. And as we’ve seen with Revolut and now Nubank, eSIM is driving this cross-pollination further as they push for knowledge sharing, 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 your pitch to an operator.” James Graymanaging director at telecommunications consulting firm Graystone Strategy, he told TechCrunch. “Banks already have this with high street banking or through websites and apps. However, the recent move by Revolut – and I suspect other neobanks in the future – is interesting because they are not traditional organisations. Their whole mission is to challenge the status quo and they are doing this very successfully in banking, so why not a banking telco merger? They have the channels and the brand appeal.”
MVN… no?
A little rant: Neobanks aren’t actually positioning themselves as MVNOs with their new eSIM travel services. A Revolut spokesperson told TechCrunch in February, “Revolut is not becoming an MVNO but has partnered with 1 Global which brings together multiple MVNO access and roaming agreements into a single network to create a global footprint of the best providers.”
MVNOs are independent mobile services built on carriers’ infrastructure, and there are many different mobile virtual network operators (MVNEs) and aggregators (MVNAs) out there (like 1Global) that help companies launch mobile networks, taking care of SIM provision, billing etc. like. Although Revolut does not offer voice and SMS, and does not assign a phone number, it still relies on the mobile carrier’s infrastructure through an MVNE to offer a self-branded mobile data service, which is very similar to becoming a Revolut MVNO .
But calling itself an MVNO could trigger additional regulatory oversight. Although banks are already heavily regulated as financial institutions, being classified as a telecommunications company will likely result in further regulatory obligations. This is something we see playing out right now in the US, with the Federal Communications Commission (FCC) trying to determine whether connected cars should be classified as MVNOsfollowing a New York Times report about how connected cars are being used by abusive partners to track their victims.
While Nubank is indeed preparing to launch an MVNO service in its native Brazil, its travel eSIM service is simpler to market due to its partnership with Gigs, as this partner handles all the regulatory complexities that come with the territory.
“Telecommunications is a highly regulated industry in all countries and a key part of Gigs’ end-to-end value proposition is that we remove all regulatory complexity for our customers,” said Frank. “To do this, Gigs almost always acts as the licensed file carrier, meaning the onus of compliance falls on Gigs rather than our customers. This allows our customers to launch their own mobile service without legally becoming an operator in a regulated industry.”
