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N26 is coming to the UK.
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A German startup bank is looking to disrupt Britain’s financial order

John Detrixhe
By John Detrixhe

Future of finance reporter

From our Obsession

Future of Finance

New technology is upending everything in finance.

London is ground zero for a growing army of startups in the super-heated world of fintech—or financial technology, for the uninitiated. N26, based in Berlin, is the latest to join the fray, seeking to challenge Britain’s homegrown digital finance companies as well as the UK’s centuries-old institutions.

Valentin Stalf, N26’s CEO and co-founder, says N26 is the fastest growing mobile bank in the European markets where it already operates. However its performance in the UK, a highly competitive market, will be a key test. N26 says the rollout will start today with a friends and family phase before opening to its waiting list. The full launch is planned for November.

The field of banking (or bank like) upstarts with similar strategies is getting crowded. London is already home to Curve, Monzo, Revolut, Starling, and others. Some of them are growing quickly: N26 says it is adding 5,000 new customers each day, while Revolut says it is adding 7,000 new accounts every 24 hours.

The startups differ in some important ways. Revolut, for now, functions like a pre-paid card (which requires less of a consumer commitment) with an assortment of digital perks and metrics, while Monzo and Starling have full-fledged bank licenses. One factor at issue is earning enough customer trust that consumers are willing have their paychecks deposited with the online institutions. It’s not clear the insurgents have made deep progress with that yet.

Still, the risk for established banks is that new wave firms siphon off the next generation of banking consumers. N26 has more than 1.5 million customers that generate more than €1 billion ($1.15 billion) each month in transaction volume. The EU-licensed bank operates in 17 other European markets.

Stalf says the company’s goal is to be a one-stop shop for finance, becoming the app customers go to for everything from payments to savings and insurance. The key is regular interaction with customers through their smart phones. This user data can be used to recommend products, and could eventually suggest ways for consumers to, say, save money on their phone bills.

Will the new generation fintechs actually threaten established banks? They have indeed managed to make, of all things, payments and current accounts interesting for younger consumers. Established banks are seen as boring and perhaps as having poor customer service, but, anecdotally, consumers still trust them to protect their money. After a decade of scandals and government bailouts, however, consumers have reason to consider alternatives to incumbent institutions.

Old banks can also learn new tricks. Royal Bank of Scotland, the state-backed lender, plans to start a consumer digital lender called Bó. While it’s still early days, the future of banking in Britain could be a sign of things to come in other markets, too.

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