How Nu used Blue Ocean Strategy to transform banking in Latin America

By Ignacio Margulies (former CPO at Paisanos) and Julián Krupka (Head of Innovation & Product Consultant at Paisanos)

Strategic analysis of business models, product, and innovation in highly complex contexts.

Introduction

Nu became the largest digital bank in the world by applying Blue Ocean Strategy: instead of competing with traditional banks, it eliminated structural costs and created a simple, digital, and accessible value proposition for millions of people historically excluded from the financial system.

Rather than fighting in a crowded market defined by branches, fees, and bureaucracy, Nu designed a new space where those rules no longer applied. That strategic move explains how it went from being a Brazilian fintech to surpassing 100 million customers across Latin America.

Behind this growth lies more than technology. There is a clear and deliberate strategic decision.

What is “Blue Ocean Strategy”?

Blue Ocean Strategy, developed by W. Chan Kim and Renée Mauborgne, proposes a counterintuitive idea: stop competing.

Instead of differentiating within an existing market (what the authors call “red oceans”), companies can create new market spaces where competition becomes irrelevant because the rules of the game change.

In practical terms, this strategy combines two moves that rarely occur together:

• Dramatically reducing costs
  
• Increasing the value perceived by customers
  

Nu understood this logic early on and applied it in one of the most rigid industries in the region: banking.

How Nu applied Blue Ocean Strategy to its Business Model

To understand Nu’s real impact, it helps to look at its business model through two interdependent dimensions: costs and value. Not as abstract concepts, but as concrete decisions.

Reducing costs without the customer noticing

One of Nu’s biggest strengths was questioning which parts of traditional banking existed purely out of inertia.

Eliminating physical branches

For decades, branches were the backbone of banking—and one of its largest cost drivers. In many traditional banks, physical offices account for up to 50% of operating costs.

Nu eliminated them entirely.

This was not just a financial decision; it was a strategic one. By replacing physical infrastructure with technology, Nu operated with a much leaner structure, scaled without geographic limits, and eliminated fees for users.

The result was a more accessible bank, especially for low-income users or people living far from major urban centers.

Automating credit assessment

Credit was another critical area. While traditional banks rely on manual, slow, and often exclusionary processes, Nu developed its own evaluation system based on usage and behavioral data.

This allowed Nu to:

• Approve cards faster
• Reduce operating costs
• Include people without formal credit histories

All of this happens behind the scenes. Users don’t see the algorithm, but they experience a much simpler process.

Increasing perceived value for users

Cost reduction was only half of the equation. The other half was creating an experience that genuinely felt different.

A clear value proposition from day one

Nu was straightforward: a 100% digital bank, with no fees, and easy to use.

For millions of people tired of banking bureaucracy, this wasn’t an incremental improvement—it was a paradigm shift.

The proposition rested on three clear pillars:

• Ease of use
• Transparency in terms and conditions
• No hidden fees
  

This clarity was key to standing out in a saturated market.

A new relationship with customers

Nu also redefined how banks relate to people. Customer support stopped being a “necessary evil” and became part of the product’s value.

The experience was designed to feel close, fast, and transparent, generating levels of trust and loyalty rarely seen in traditional banking.

One App, the entire bank

All of Nu’s services live in a single mobile app: opening an account, managing cards, making payments, getting support.

This reduced friction and made adoption easier, especially for users unfamiliar with complex financial procedures.

The segment no one was looking at

One of Nu’s most strategic moves was not targeting the traditionally banked customer, but a historically underserved segment:

• Unbanked individuals
• Low-income users
• Customers rejected by traditional banks

According to the World Bank (Global Findex, 2021), nearly half of adults in Latin America were underbanked or outside the financial system when Nu began its expansion. That was its true blue ocean.

The impact of Blue Ocean Strategy on Nu

By removing barriers and increasing value, Nu created its own space within the banking industry. It didn’t compete head-on with traditional banks, it changed the rules.

In practice, this meant:

• Eliminating dependence on physical infrastructure
• Reducing structural costs
• Simplifying the financial experience
• Expanding the market instead of fighting over it

The result was the creation of a new digital banking market in Latin America, where Nu could scale without directly confronting traditional competitors.

Conclusion

Nu’s case shows that innovation doesn’t always mean adding more technology, it often means questioning what an industry takes for granted.

By applying Blue Ocean Strategy, Nu transformed an expensive, exclusionary banking system into an accessible, scalable, and people-centered platform.

For companies operating in saturated markets, the lesson is clear: exponential growth emerges when bold strategic decisions are paired with a genuinely simple value proposition.

Frequently asked questions about Nu and Blue Ocean Strategy

How did Nu apply Blue Ocean Strategy?

Nu eliminated structural costs such as physical branches, automated key processes, and created a commission-free digital value proposition focused on segments historically underserved by traditional banks.

Why didn’t Nu compete directly with traditional banks?

Nu eliminated structural costs such as physical branches, automated key processes, and created a commission-free digital value proposition focused on segments historically underserved by traditional banks.

Instead of fighting for customers under the same rules, Nu created a new digital banking market where experience, accessibility, and simplicity mattered more than traditional infrastructure.

What competitive advantage did Nu gain from this strategy?

A lower cost structure, high scalability, and a significantly superior user experience, allowing rapid growth without direct confrontation with large incumbents.

Can Blue Ocean Strategy be applied to other industries?

Yes. It is especially effective in mature industries with high costs, legacy processes, and poor user experiences.

Coming Soon

In the next post, we’ll analyze how Nu leveraged its brand to generate FOMO at launch and build a MOAT driven by CAC efficiency.

If you’re interested in learning how to apply these strategies in your own company, let’s talk.

At Paisanos, we help companies of all sizes innovate, build products, and design disruptive business models.