COPENHAGEN, Denmark — App-only startup bank N26 is one of Europe’s hottest startups — and it’s moving very fast.
The Berlin-headquartered bank announced on Monday that it has partnered with fellow startup Clark to offer insurance through its app.
It’s one of a number of new products that N26 has launched this year, either built in-house or conceived through partnerships. Other launches include an overdraft you can apply for through your smartphone and a partnership with German investment platform Raisin.
“Right now it’s about making traditional banks redundant, in that we offer a product for every financial need of our customers,” cofounder and CFO Maximilian Tayenthal told Business Insider at the Money2020 conference in Copenhagen this week.
“Today, if you’re a customer and you want to use a savings product you still have an excuse to use something other than N26. In the next 6 months, we want to bring one product and what we see as the best product in every category.”
They have already made good progress, Tayenthal says: “Right now if you want to do a cross-border currency transfer, you can do this with TransferWise over N26. For investment, we’re partnering with Raisin. For insurance, we’re partnering with Clark. For us, we really want to disrupt banking by launching products that cover every aspect of financial services.”
Ultimately, N26 aims to become “the leading pan-European for 18-to-35-year-olds.” It is already well on its way. Tayenthal founded the company with Valentin Stalf in 2013 and four years later it has close to half a million customers across 17 European countries. It is a fully licensed bank with its own core banking platform.
This momentum has attracted significant attention. Hong Kong billionaire Li Ka-Shing led a $US40 million funding round into the startup last year — “He likes to do investments that are disruptive to industries,” Tayenthal says — and CNBC named N26 as one of Europe’s 50 hottest startups this year.
However, there are detractors. Some are sceptical that N26 can make the economics work — to make the product marketplace model they envision profitable the company would need a huge, highly-active customer base.
ING’s head of fintech Benoit Legrand told Business Insider last year: “Frankly, if you look at the neobank [as app-only banks are known] space — they’re flourishing everywhere but we’re still waiting for the business model to show up. Where is the money? Where is the return?”
Tayenthal says: “We used to get people saying you don’t have a business model. It’s not true. We always had a clear monetisation strategy.
He adds: “What is true is that no one at N26 has a single monetary KPI in the first year after our launch. We were working on our customer base, on the branding, on launching products, building up the team. We didn’t work on short-term monetisation. We want to be an app that customers open once a day.
N26 is “not focused on short-term profits,” he says. For now, it’s all growth, growth, growth.
“We have positive unit economics which is cool, so every customer we add to the platform is making the business less negative,” Tayenthal says. “When it comes to our revenue model, one has to understand that we operate at a very low cost. We acquire customers at a much lower cost. Secondly, we have much lower overheads. We have lower IT costs, everything is automated. We don’t have branches.”
N26 is working on building more credit products and also has plans to expand its current product range across all the markets it is in. There are no immediate plans to get into business banking space but “in the long run we will launch a product there as well,” Tayenthal says.
One notable market where N26 is absent is the UK. The Times reported in April that N26 was set to launch in Britain by the end of the year, but Tayenthal is coy.
He says: “It’s a really interesting market and we are thoroughly looking at it,” before adding: “I don’t want to commit to any timeline.”
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