A deep dive into digital bank N26

This is an excerpt from AltFi's Digital Banking State of the Market Report 2022, which is available for free here.

N26 is one of the poster children of European digital banking and a German powerhouse, with over eight million customer accounts across 24 countries.

But its co-founder and co-CEO Maximilian Tayenthal appears to be cut from a different cloth than the digital bank’s ego-driven peers—level-headed, absent of bluster, and, whisper it, admiring of his peers.

“We’ve always said that digital banking isn’t a winner take all game, and I think there are many aspects to be taken from players in our space who may have taken different paths from us,” said Tayenthal.

He dubbed Starling Bank’s focus on its home market and “very strong” emphasis on loans and mortgages “interesting”; noted NuBank’s “hugely interesting numbers” published for its initial public offering (IPO); and said it is “good to see” European competitors like French banking unicorn Qonto “making moves” following its planned purchase of German fintech Penta.

What N26 Has To Offer

App-based N26, founded in 2013 and with backers including Peter Thiel’s Valar Ventures, is one of several European online lenders looking to disrupt European regional banking.

Offering checking accounts with little or no fees, the Berlin-headquartered bank raised a fresh $900m last year, which was the largest-ever financing round for a European digital bank.

The funding round valued N26 at a whopping $9bn plus, putting it on an equal footing to Germany’s second-biggest listed lender Commerzbank. 

Since then, the market has taken a dramatic tumble and N26’s juggernaut-like rise has also not been without setbacks.

It has curtailed its global ambitions (pulling out of the UK and US), suffered staff concerns about its work culture and came under fire from German financial regulator BaFin for its lax anti-money laundering controls, limiting the number of new customers it can accept.

In response, N26 has increased its anti-financial crime offering over the past year and Tayenthal said that while the fintech has not completely written off having another crack at the UK and US in a bid for global domination, for the time being at least, the move has been shelved.

Crypto And “Keeping Our Heads Down”

N26 executives have a reputation for their frosty relationship with the media, but perhaps they simply shy away from the spotlight because they prefer to get on with running the bank. In keeping with this nose-to-the-grindstone attitude, Tayenthal said that at N26 this year they have been “keeping [their] heads down” and have “sights set forwards”. 

“Our efforts for the last year have been very much focused on building share-of-wallet and giving customers more reasons to choose N26 as their primary account beyond just plain user growth,” he said. It’s a strategy that is paying off, the co-CEO pointed to “good growth” across deposits, transactions and customer activity.

“We’re also seeing our revenue streams develop nicely, with a good balance of commission income as well as interest income,” he added.

Want to keep going? Read the full feature in AltFi's Digital Banking State of the Market Report 2022, out now!