FinTech Profile: What makes Challenger Bank N26 tick?
As European countries battle for the title of fintech capital, Germany’s part in the race comes from a number of innovative start-ups. Among these is the Challenger Bank, N26. With the brand today announcing the launch of its new product, Shared Spaces, FinTech Magazine takes a closer look at the challenger bank
Founded by Valentin Stalf and Maximilian Tayenthal in 2013, the N26 Mastercard was officially launched in 2015. Since then the challenger bank boasts a customer base of over 3.5 million across 24 European countries.
Need to know: N26 top 5
1. Centralised control via the app: N26 does not have branches, instead all decisions and assistance can be obtained via its app, which is optimised for Android, iOS, and desktop.
While originally, the card owner would have had to call a bank ahead of travelling abroad, they can now activate the use of the card in specified locations through the Control Centre.
Alternatively, the card can be deactivated abroad, should the user remain in their home country, thus preventing fraud.
2. Free payments abroad: Many other banks will charge a foreign transaction fee, which accumulates quickly on holiday. This is money that can now be better spent on enjoying your time abroad.
3. Know your money: The card owner can receive real-time statistics of expenditure, organised into categories, as well as separate places to hold money within the app for a particular savings goal. This feature is similar to Monzo’s ‘pots,’ and allows a better control of finances.
4. Instant payments: In addition to the classic method of transferring funds with IBAN details, contacts on the card holders phone can receive payments within seconds. Recipients who also have a N26 account can receive payments instantly.
5. Adjustable withdrawal limits: the withdrawal limit can be controlled via the app, with a daily limit of US$5,500.
Latest news: Shared Space is here
Currently in Beta mode for selected customers, Shared Spaces is a new product designed to consolidate finances between joint accounts without the need for a joint account. Designed to improve flexibility, the product can be used for splitting bills and rent, sharing the cost of a gift and saving for a group holiday for up to 10 people.
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“When we launched Spaces in 2018, this pioneering feature was one of the first in the market to introduce personalised sub-accounts, so users could set aside money based on their personal preferences and needs. Shared Spaces is a natural extension of this, and builds further on our efforts to deliver the most flexible banking experience in the world,” said Stalf.
Did you know?
As of July 2019, N26 has expanded to the US, opening an office in New York through a wholly-owned subsidiary. Along with the expansion into São Paulo, this firmly plants N26 as an international product.
Zafin: Banking is now in the era of the tech ecosystem
The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?
John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.
Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:
Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?
It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started.
While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk.
Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand.
I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.
When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic.
Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?
I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.
Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.
The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC.
I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives.
Q. Are there any other bank tech trends you'd like to discuss?
Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement.
Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.