N26 history

Number26 was founded in February 2013 by German entrepreneurs Valentin Stalf and Maximilian Tayenthal.

Before cofounding Number26, Valentin Stalf studied accounting and finance at the University of St Gallen, Sophia University in Tokyo, and the Vienna University of Economics and Business Administration. During his studies, he worked in strategy consulting and investment banking.

After studying, he entered the internet incubator Rocket Internet, where he took part in the foundation of several companies and worked as entrepreneur in residence.

Maximilian Tayenthal studied business administration, international law, and management in Vienna, Rotterdam, and Paris. Before founding N26, he worked as a strategy consultant at Booz&Company and as an assistant to the CFO at Austria’s largest insurance company.

Headquartered in Berlin, the startup Number26 used to operate until 2016 without a license and provided financial and credit services only to residents of Austria and Germany. Three years later, the company got the name N26 and a European banking license. Now, in 2016, N26 is officially the very first non-bank in Europe.

It provides complete online banking: creating and maintaining current accounts, managing debit cards, storing, and transferring money. All the functions can be accessed through the website or a smartphone app.

N26 entered the UK in October 2018. Already, the company operates in 24 countries of Europe. More than 8 mln customers receive services from Neo bank.

For comparison, in 2016, about 300 thousand people used its services.

History of N26

In 2013, the employee of the Rocket Internet incubator Valentin Stalf and his friend Maximilian Tayenthal, assistant to the CFO of a big insurance company, quit their jobs and founded the fintech-startup Papayer, which was soon renamed Number26.

Valentin Stalf: Maximilian and I have known each other since school. The trust is there—that is very important if you found a company together. In addition, our experiences and knowledge from different areas complement each other perfectly.

Maximilian worked in law, and I worked in start-ups. Showing that banking doesn’t have to be as cumbersome as the old banks imagine it to be is our goal.

Initial plans of the founders included launching a project for teenagers and their parents. According to the concept, one could create an e-wallet with this service and use it like a normal bank account.

Using this card, it would be possible to withdraw cash through ATMs, and the main feature would be the possibility of tracking of all financial operations with tools on the website and in applications of the company. According to their visionaries, it was a product that would interest parents who gave their children pocket money and wanted to know where they spent it.

After nine months of development, the entrepreneurs reconsidered the idea of the service and began developing a full-fledged mobile bank. The entrepreneurs saw more prospects in this direction of work.

In 2014, Stalf и Taienthal participated in TechCrunch Disrupt London – an annual conference about tech-startups. The founders told about the service and presented its closed beta version. But the project Number26 was coldly welcomed by the audience, and did not get the support of investors.

Investments in the company

In 2014, the company was still cash to grow: Earlybird Venture Capital invested €2m in this startup, one of the prominent venture capital investors in European technology companies.

In total, N26 has received more than $512.8 million in financial backing between 2014 and 2019. Investors include PayPal founder Peter Thiel, Hong Kong billionaire Li Kashin, as well as Tencent, Insight Venture Partners, GIC, Allianz X, Horizons Ventures, Greyhound Capital, Battery Ventures, Zalando and Redalpine Ventures.

N26 claims that it is the largest round of equity funding by a non-IPO company in the German Fintech sector to date and one of the largest in Europe. Online bank N26 was listed among one of Europe’s most promising startups back in 2018, according to TechCrunch.

The emergence of neo bank N26

In January 2015, Stalf and Taienthal introduced Number26, an online banking service. The firm launched applications for iOS, Android, and announced a website. For banking transactions, Number26 began collaborating with Wirecard, an internet technology supplier for electronic payments.

The company issued and processed both physical and virtual cards. To make the company’s cards accessible in every single part of Germany, founders of the firm added the payment system of Barzahlen. Accordingly, the customers of Number26 were able to refill their accounts and withdraw cash as well. Within one year, the company gained more than 200,000 users.

In July 2016, Number26 was renamed as N26. In the same year, the company obtained a European banking licence with the German Federal Financial Supervisory Authority. The startup expanded later to launch in six other countries including France, Greece, Ireland, Italy, Slovakia and Spain.

The Launch of the N26 in the UK

In October 2017, N26 expanded to the UK. At that time, the London-based fintechs already operating included Revolut, Monzo, Starling, Atom, and Tandem Bank.

For the first time, customers in the UK were offered sterling accounts, a debit card, and personal account tools. Because N26 had received a German banking licence, it was able to begin operating without taking out a separate licence for the UK.

That is why N26 started their work in the UK only in 2017. All that time, the company worked at building a system of integration with the British banking system.

Thanks to the system of integration with the country’s banking system, N26 has been given bank sort codes. They determine in which banking system the bank is located and whether the accounts of its customers can be serviced. N26 users can fully avail of the functions of their account—for example, in paying utility bills.

Opening an account with N26

During the 2014 TechCrunch Disrupt London speech, Valentin Stalf called the speed of his product the main advantage against other European banks. In 2019, this statement has not lost its relevance. With the company’s website, you could allegedly open an account in eight minutes. You can also do it in the iOS or Android apps.

Valentin Stalf: The point is, we’re trying to change how a bank should work. I mean, we create an Uber or Spotify just in FinTech. We spent quite a lot of time enabling our customers to use the mobile bank in a proper way. So if you look at traditional banks, they usually have the large branch network using the 1980’s technology. We tried to create a model based on our mobile apps. On the display of their smartphone, there is everything that can be needed by a user.

A client of this bank can be any European Union citizen, who is at least 18 years old. On the website or in the mobile application of N26, it is necessary to mention one’s name and surname, country, age, perform a video call with the representative of the bank, and show your passport to confirm your identity. Further on, the employees of the bank open a current account to the new user and send a Mastercard debit card by post.

Since N26 has a banking license, deposits are insured up to €100,000 under the European Deposit Guarantee Scheme – DGS. After this, the user can make transfers and receive money, and also pay for purchases with the card. Transfers of cash to any other user of the bank are also made in real-time; this is what is called MoneyBeam.

Valentin Stalf: Our goal is to create a fully mobile bank that would be as user-friendly as possible. We pay great attention to creating a fintech hub. We are trying to unite fintech and all related products so that the customer can access them from one application.

Opening an account with N26 is a quite simple and at the same time fully digital procedure. Here are the basic steps:

Note that this process might be different in the country you are residing in because the rules and regulations governing it may not be the same. Take note that the following program requirements need to be satisfied for one to open an account within their jurisdiction.

How N26 service works

You can enable push notifications: get information about transaction status or bank warnings if some suspicious activity is detected. You can block your card in a couple of clicks in the application in case of loss, unblock it, and even freeze your card for some period of time. All transactions and operations on the account appear in real time in the application of the bank.

Also in the mobile application, users can use customizable overdraft and financial tools. You could, for example, analyze what you have spent during a day, week, month or a whole year. Spending information is given, aware of geo-location-at cafes, shops, petrol stations and so on. Spaces, allowing you to create sub-accounts for storing and saving money, was the new feature launched by N26 in 2018.

It can also be mixed with the functionality of voice assistants. In the same year, 2016, the ability to send money using the Siri voice assistant was added to the N26 iOS application. For that, a user needs to tell whom and how much money to send, saying the command to use the N26 app.

Specifically, during the WWDC 2016 Worldwide Developers Conference, Apple presented the integration of Siri with iOS apps. The speaker gave examples with screenshots of the N26 app. Moreover, users of the bank can send money with iMessage.

N26 uses the technology of artificial intelligence in order to better understand their services. Therein lies one of the competitive advantages for launching a startup in the American market.

Valentin Stalf: All that is visible in the N26 app: your credit rating, your salary and all of your spending. But the majority of people don’t have enough time to deal with financial issues themselves and need good recommendations. For example, by analyzing the credit history, artificial intelligence will suggest options on what the user can spend money on.

If, based on your family’s budget, the algorithm believes that it would be better value to buy a flat rather than pay rent each month for a rental property, then it will suggest how to buy more affordably. All in the not-too-distant future.

The N26 supports a range of currencies but comes with a few features that are important to consider:

Terms and conditions and features are subject to change and it is advisable to check the updated information on the official website of N26 or their mobile application.

Map N26

N26 is one of the innovative banks set up in the year 2013 in Berlin, offering mobile banking based on ease and transparency. Its strong feature is that it comes with a contactless debit card linked to a mobile application through which users can handle their finances in real time.

On top of receiving instant transaction notifications, detailed reports on spending are available, limits on expenditure can be set, and cards may even be locked with the N26 app. It’s also developing innovative financial products for things like personalized savings plans or investment options.

Cooperation with different financial partners in many countries allows N26 to offer competitive exchange rates and small commissions for international transfers. Its users’ data security and transaction security are possible by using modern technologies of encryption and a multi-level security system.

It is the bank preferred by youths and digital nomads due to its flexibility, ease of use, and minimalistic design. N26 continues to extend its influence, offering new and more advanced solutions in the world of digital banking.

Commissions N26

Commissions at N26 depend upon the kind of account and services availed. Following are a few important aspects that are related to commissions in N26:

Note that terms and fees are subject to change, and it is always a good idea to check the latest information directly on the N26 website or through their mobile app.

How N26 earns its money

Neobank N26 does not earn interest from the local currency transactions and does not charge maintenance fees on behalf of the user’s main account or account. The subscription fee for a premium card, N26 Black, is charged by the company. The holders of the respective card will have additional services, such as insurance for travel and mobile phones, and also foreign currency transaction fees are lower.

N26 also generates revenue through the use of AI technology as a financial platform. It provides savings, investment, credit, and insurance products directly to its users within the app.

N26 also sells a platform to other fintech companies where they can sell to N26 customers, and in return, they get a percentage of those sales.

Valentin Stalf: We want to inject some competition into this product. A couple of years from now, when we look at our platform, we’ll find loads of competing fintech companies that are competing for the attention of the user. The customer will be able to choose the best transfer rate or open a savings account on the most favorable terms and conditions. The service is to be based on personalized suggestions with the use of artificial intelligence.

N26 offers third-party instruments to invest money and open a savings account. An agreement has been signed by the bank with German companies Raisin and Vaamo in this regard. Raisin will let you open a savings account in just a few clicks.

And Vaamo offers investment asset management with robo-advisors. Technology enables the personalization of offers by offering the most favorable prices. This way, the robot replaces both a bank advisor and a dealer.

Also, it is possible to arrange insurance services on the bank’s website. For this purpose, N26 co-operates with the American insurance agency Clark. And the partnership of N26 with the German lender Auxmoney allows clients of the bank to send an application for a loan in several minutes. For this purpose, an electronic signature needs to be placed in a special window of the application, and information about the transaction has to be pointed out.

Valentin Stalf:

Thanks to the state-of-the-art customer experience system, it costs one-sixth of what traditional banks spend on serving a customer. That cost will continue to decrease-the more customers we have on our platform, the more we earn. This is the reason why growth remains a focus. We want to provide better and cheaper banking services for more customers across the globe.

Travellers rave about free cash withdrawals anywhere in the world. For international money transfers, N26 collaborates with TransferWise, a specialist in cross-border currency conversion. This model enables the company to charge lower fees for exchanging money internationally than is usual with conventional banks.

N26’s Drawbacks – registration using a fake passport

Wirtschaftswoche In 2018, German weekly Wirtschaftswoche, in an article, questioned the reliability of N26’s user identification. Wirtschaftswoche stated that it can be easily possible to create an account on the service using a fake passport. The company does not deny this.

Valentin Stalf, co-founder and CEO of N26:

There were people who provided us with forged passports, but unfortunately, we only found that out after they had already been registered. But this is a common problem and many banks are facing such cases.

To minimize cases of fraud, N26 constantly verifies all kinds of transactions of the customers of the bank. The company also co-operates with SafeNed, the platform for deposit management and customer identification.

Documents can be verified in several ways. You can have a video call with a bank employee so that he or she can check the passport and compare the photo in it with the face of the client.

German citizens can get their identity verified at the post office. Otherwise, you do a selfie holding a passport in front of you and send it in for verification. This is a popular form of identity verification in the UK.

It can only log in with password or fingerprint. The pin code is used to verify all online and offline transactions. To make the battle against malicious users active, N26 has started a reward program for finding errors or failures of the system.

Mass account cancellation in N26

In June 2016, more than 160,000 customers of the N26 Bank had their accounts closed. That was less than 0.2% of all its clients, but that seriously pounded the reputation of the company-the bank was criticized very sharply on Twitter.

Later it emerged the reason for such measures was suspicious activity in the accounts of customers and too frequent cash withdrawals.

The bank itself pays the percentage for the transactions, and does not charge the customers for the withdrawal. For Germany, it is within the range from €1.5 to €2. Because of such massive cash withdrawals, N26 was obliged to close the active accounts not to incur losses.

Valentin Stalf:

In Germany, these have averaged between €1.5 and €2, well above the European average. We covered this fee on the assumption that most customers would use their accounts reasonably. But there were people withdrawing cash for months on end-15 times, and sometimes 30 times a month. We could not afford this.

To prevent these situations in the future, N26 implemented a “Fair Use Policy” for the residents of Germany. It brought in limits to commission-free cash withdrawals-up to five times per month-and brought in a “grace period” for new customers. Once the limit is reached, customers will be charged €1.5 to €2, and new account holders can receive unlimited commission-free withdrawals for three months.

N26 company cost

Neobank N26 reached a valuation of 2.7bn USD in 2019, beating the 1.7bn USD valuation of its rival, Revolut, to take the crown as Europe’s most valuable fintech startup. It was helped by a funding round of 300m USD from Insight Venture Partners back in January.

This has made it the largest private equity funding round for fintech companies in Europe, according to US analyst firm PitchBook. In 2019, the size of deposits in N26 exceeded $1bn.

Licence N26

N26 is a German neobank that provides online banking to its clients across both Europe and the US. It was founded in 2013 by Valentin Stalberg and Maximilian Teichmann, headquartered in Berlin. At present, N26 has more than 8 million customers across 25 countries, with more than €2 billion serviced on the accounts.

Free basic account, Premium accounts with other added services, Loans, Investment, Insurance. It also provides free international money transfers and cash advances in various currencies worldwide.

Bank N26 is a licensed bank and hence comes under the European banking regulations. Advanced technologies such as artificial intelligence and machine learning have been implemented in it.

N26 holds a full banking license issued by the European Central Bank (ECB) and the German Federal Financial Supervisory Authority (BaFin). This license came in July 2016 and was an important milestone for the company’s development into turning it from a dependent fintech on a partner bank regarding its core banking platform to a fully licensed bank. This transition enabled N26 to independently offer the full suite of banking services one would expect from a bank: from retail banking around deposit management for both personal and corporate bank accounts to more sophisticated banking services like lending.

Getting the banking license was only a proof that N26 met the tough set of prerequisites, such as regulatory standards, minimum capital requirements, and strong security and data protection measures. Having obtained a license, N26 is permitted to sell consumer loans in Germany and France and sell overdraft offers in Germany and Austria. It also grants local IBANs to issue bank accounts in Spain and Italy. Furthermore, deposits with N26 are insured up to €100,000 under the German Deposit Protection Scheme, the standard protection for deposits held in European banks. Lawyers from Regulated United Europe can assist in acquiring an EMI license in Europe and also finding buyers for a company with a valid financial license in Europe.

Over the past few years, quite significant changes have been made to N26’s geographical operation strategy. For example, in the year 2020, because of Brexit, N26 had to shut down its operations in the UK; this was in accordance with the legislation that demanded a separate UK banking licence following the exit of the UK from the European Union. It affected all accounts based in the UK, which were later shut down. To add up, in November 2021, N26 announced that it was withdrawing from the United States to focus on its core European business. This decision also meant that some 500,000 U.S. customer accounts were closed down and marked a shift in strategy toward the European market.

N26’s commitment to living up to regulatory standards and providing safe banking can be traced from the time it was a start-up in the fin-tech industry to what it is today.

Chronology of N26 by year

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