Future Digital Finance 2020

March 09 - 10, 2020

Hyatt Regency Miami, FL

Here's How N26 Is Winning by Putting Profitability on the Back Burner

Brought to you by WBR Insights




Banks, like all businesses, are run for profit. Most endeavors in business are carried out with one eye firmly fixed on the bottom line and return on investment. For most, this way of doing things is a no-brainer - but there is another way.

The first not-for-profit bank brand opened back in 2002. The Charity Bank was launched in the UK after being conceived by the Charities Aid Foundation and receiving investment from its social loan fund. It had a mission to offer affordable loans to charities which would traditionally find it hard to access mainstream finance from banks. The finance for those loans would come from philanthropic people who wish to use their wealth to benefit others. As a registered charity, all its operating surpluses would be reinvested in the charity sector.

While German-born digital bank N26 isn't operating in the charity sector like the Charity Bank, it has a strategy to put profitability on the back burner for now and focus on delivering an amazing banking experience.

N26

As a 100-percent digital bank, N26 does not have a single brick and mortar branch to its name. It was designed from the ground up to appeal to tech-savvy consumers who have become weary of dealing with massive banking brands that care more about the shareholders than they do about their customers.

"The company is one of Europe's most well-known 'neo banks' that were set up over the past few years to compete with traditional banks by offering more user-friendly digital services," reports Reuters. "It has amassed 3.5 million customers in 24 European markets since its initial launch in 2015 and raised more than $500 million from investors including Insight Venture Partners, Tencent and Peter Thiel's Valar Ventures."

N26 connects directly to a customer's smartphone and boasts that it's able to get a new account open within five minutes in most cases. Alongside a lightning fast onboarding process, N26 also offers all the services one would expect from a traditional bank. Features such as direct deposit, payment transfers, instant notifications, and savings account options.

Banking Without Profit

Obviously, as a bank with no branches, N26 customers cannot visit branches to withdraw cash and must do so via an ATM.

However, with modern enhanced ATMs offering progressively more services, this will become less of an issue as time goes on. All account information is accessible through the customer's smartphone or other digital portals such as statements and notifications, and there is almost zero human interaction in the entire customer experience. N26 has also partnered with TransferWise for international payments and supports transfers between nineteen foreign currencies from the smartphone app.

Other features include:

  • N26 accounts support Google Pay, which allows customers to make payments in stores and online.
  • The ability of N26 customers to create sub-accounts for saving or other uses.
  • N26's app allows customers to set daily spending and withdrawal limits, to lock or unlock their debit card, to enable or disable online or foreign payments, and to reset the account PIN.
  • N26's app also generates spending statistics, which means it can automatically categorize and breakdown purchases into different groups.
  • N26 provides customers with a UK account number and sort code, which facilitates direct deposits and payments in the same manner as a standard bank account.
  • A unique feature called MoneyBeam permits customers to send cash instantly to other N26 users, or within two days to non-N26 users.

Having become extremely popular in continental Europe and the UK, N26 is now looking to repeat that success in the US market. The bank reported that it had around 100,000 prospective customers already sitting on its US waitlist ready for the launch in the summer of 2019. The US version of the app has many of the features which have made the UK/Europe offering so popular and will likely expand to add more.

"The account will have no minimum balance requirement or monthly charges," continues Reuters. "Over the summer, N26 will start offering two free withdrawals per month at ATMs nationwide and later introduce a premium account. N26's U.S. launch, which has been around two years in the making, comes less than a month after British digital bank Monzo started rolling out its services overseas."

Final Thoughts

By focusing on delivering amazing services rather than profit, N26 is finding massive success in Europe and soon, the US.

"In all honesty, profitability is not one of our core metrics," said Cofounder and CFO, Maximilian Tayenthal. "We want to build a global financial services company [...]. In the years to come we won't see profitability - we're not aiming to reach profitability. The good news is we have a lot of investors that have very deep pockets and that share our deep vision and that are willing to support the company over many years to come."


The disruption of digital banking is set to be a hot topic at Future Digital Finance 2020, being held in March at the Hyatt Regency Miami, FL.

Download the agenda for more information and insights.

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