Unless you don’t really care about FinTech (in which case I question why you are subscribed to this blog), or living in North Korea, you would have read that N26 have quit the UK. They played the Brexit card and they played it in a big way. The Berlin based scale up announcing on February 11 at it will “be unable to operate in the UK with our EU banking licence so we will be leaving the UK and closing all accounts” in April.
Now, I am in no way a raging Brexiteer. I am not sitting here drinking my mug with Nigel Farage’s face and a Union Jack blasted on it. In fact, I still think it could have detrimental long-term implications for the UK economy, especially outside London. However, I would strongly argue blaming the current geo-political strategy and economic policy of the UK government is a scapegoat for N26’s own strategic failings.
Essentially N26 came to the party called ‘Challenger Banks in the UK’ too late and did not stand out from the crowd, despite a huge targeted marketing campaign. Monzo, Revolut and Starling were already starting to get exponential growth in their consumer base, and N26 simply did not have a strong enough USP. Also, Brexit should not be a big surprise; leaving the European Union has been the official policy of the UK since that fateful day in June 2016…. over 3 and a half years ago. N26 launched in the UK in October 2018!
I wanted to stress test my thoughts with a couple of heavyweight industry analysts, to get their viewpoints. Andrew Vorster the outspoken and respected payments veteran states –
“My personal opinion is that N26 were struggling to gain traction against what effectively are the “poster children of challenger banks” in the U.K. namely Monzo, Starling and Revolut. Customer expectations are continuously increasing thanks to what these three in particular have done and N26’s initial product offering wasn’t at parity with what they already offered – if you’re going to challenge the challengers then you need to exceed expectations and they simply didn’t.
Blaming Brexit feels like a bit of a cop out to me – I don’t know the intricate details of their position or decision but general industry opinion is that they could have made it work if they wanted to.”
Andrew Vorster, Innovation Catalyst
“I think there are a whole host of factors behind this decision apart from Brexit. There is an array of avenues N26 could have gone down to maintain their presence; particularly collaborating with a BaaS provider. This is something they actually did with Wirecard, pre-German banking license. N26 has been able to easily export it’s app across Europe because mainland Europe has a handful of underlying features regardless of market such as IBANs, SEPA, ATM withdrawal fees. However, the UK sees sort code and account numbers, faster payments, and free ATM withdrawals and a reliance on overdrafts. I am not sure to what extent N26 tailored it’s app and model to account for the nuances of UK consumers, but without this, they wouldn’t be able to get the customer numbers to maintain the presence. It reminds me a lot of what we saw with Fidor Bank when they launched in the UK, which also subsequently pulled out.”
Meaghan Johnson, Founder, Digital Magss
There has been positive impacts of N26 leaving the UK. Not for N26 but their competitors; Monzo, Starling and Monese all seeing an immediate uptake in customers. I would also like to argue the figures show London is still Europe’s capital of FinTech and all signs show it will continue to be for the near future. Over 42%, of investment into FinTech in Europe was into London in 2019, that is a cool €3.5 billion*. Within a more buoyant economy, hopefully this number should rise further.
Have N26 shot themselves in their very trendy feet? Time will tell.
Source: Finnovating Open Innovation Team
