N26 Says Bank Closures May Drive Mobile Banking Adoption
As banks close their branches to help stop the spread of the novel coronavirus, N26 GmbH sees an opportunity to convert new users.
In its home market, Germany’s largest lender Deutsche Bank announced Monday it would temporarily close more than 200 branches in response to the pandemic, joining others lenders in reducing physical contact between employees and customers.
“We assume that many people will open an online account because more and more bank branches are closing due to the corona crisis. Online banking will become much more important,” Chief Financial Officer Maximilian Tayenthal said in a telephone interview on Monday.
So far, though, the virus has hurt growth at the Berlin-based startup as customers shop less, he said. Customer card sales declined slightly in March compared to February, Tayenthal said, declining to give specifics. People are spending less on travel, but more on digital products like streaming services, he said.
Backed by billionaires Peter Thiel and Li Ka-shing, N26 raised $470 million from investors including Insight Venture Partners and Singapore’s sovereign wealth fund GIC Pte. to fetch a valuation of $3.5 billion in July, making the company one of Europe’s highest valued non-listed fintech firms.
“In the current situation, many fintech investors advise restraint,” said Tayenthal, who co-founded the bank with Valentin Stalf in 2013. “Young companies will have to make do with the money they already raised for longer.”
The company now has more than 5 million customers in 25 countries and offices in Berlin, Barcelona, Vienna, New York and Sao Paulo. Tayenthal said the company is well funded for now and plans to focus on building out its existing markets.
The company doesn’t plan to exit any more markets after it leaves the U.K. next month, he said. N26 had said the country’s decision to exit the European Union meant that it wouldn’t be able to operate there with an EU banking license.
“The withdrawal from further countries is not planned,” said Tayenthal. “And while the company still plans to open in Brazil, it’s primary goal is to gain even more customers in existing markets and to improve our products.”
Authors: Sarah Syed and Stephan Kahl
Source: Bloomberg law news