Digital Banking Expansion, Rising US Bank Executive Pay, and New Auto Finance Strategies

Nubank’s American dream

As Nubank’s co-founder David Vélez prepares to launch a full-service digital bank in the US, he tells the FT that he believes the US market is ripe for disruption because of its high operating costs, customer fees, cheap deposits and outdated practices. Nubank has looked at the US before, but says that under the Trump administration, overseas banks have felt more welcome. “You still see physical cheques in the US and a significant amount of physical cash. A lot of the banking in the US is still done in branches,” he said. “Consumers are paying for all that physical infrastructure.” For now the fintech is drawing up a strategy that will be initially “focused on certain niches”. Although high-income and urban populations in the US have good banking options, that is not always the case in the mass market and “Middle America”, Vélez argued.

Vélez identified rural areas and the Hispanic demographic as less well-served. “The more you go in the bottom of the pyramid, the less service and competition there is, and the more people are paying in fees and interest rates,” Vélez said. “It’s such a large market that even a small opportunity, a small percentage would really move the needle for Nubank.” He also said that the business was all in on AI. “Our goal is to be the leading in the world in using AI for financial services. Nobody really globally has developed a lot of those use cases. We are at the forefront,” said Vélez. The company has integrated AI models from an acquired business into its credit underwriting — a move that has allowed it to selectively increase customer card limits.”

The forty-million-dollar salary

Forty million dollars looks like the new standard for running a major American bank with Well Fargo Charlie Scharf’s salary rising 28 per cent in 2025 to hit the forty million mark. “The lender's board cited Scharf's leadership in fixing major compliance problems and closing several major regulatory punishments, as well as rising earnings and revenue, as reasons for the CEO's pay bump,” writes Reuters. “Scharf joins other Wall Street leaders who received bigger payouts for a banner year. Goldman Sachs CEO David Solomon's compensation rose 21% to $47 million for 2025, while JPMorgan Chase CEO Jamie Dimon was awarded an increase of just over 10% to $43 million.” Citi’s Jane Fraser earned $34.5 million in 2024 but her 2025 salary has not been announced.

Little wonder then that international banks are looking to set up in the US, which appears more open than before under the new administration. Santander this week acquired Webster Financial, UBS said it hopes to get a full US licence soon, and Lloyds Bank said it will expand its international operations including in the US to serve its corporate customers.

The Bank of Tesla?

The Bank of Tesla? Automakers have been offering finance to buyers since 1919 when General Motors set up the General Motors Acceptance Corporation, and for many manufactures, lending is as profitable as manufacturing. Now Tesla is replacing discounting with loans of up to seven years as it battles for market share in China. “‘All EV makers are facing a dilemma this year as rising raw-material costs eat into their profit margin, which prevents them from offering steep price cuts even though overall market demand has turned weak,’ said Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service. ‘The new incentives show Tesla and other premium EV makers’ eagerness to lure more buyers.’

In January, Tesla China said it would charge annualised interest of 1.36 per cent on a seven-year car loan, enabling buyers to pay less than 2,000 yuan (US$288) a month to own a Shanghai-made Model 3 or Model Y after a down payment of about 80,000 yuan,” reports South China Morning Post. “It was the first time that an automotive firm in mainland China granted a seven-year loan to car buyers the previous maximum being five years, and the rate was lower than the normal 3 per cent for consumption loans.” Tesla’s move was quickly followed by Nio and Xaoimi. “Xiaomi, whose SU7 became the first Tesla killer after outselling the Model 3 in 2025, offered a seven-year loan with an annual interest rate of 1 per cent.”