KEHLAN KIRWAN: Kehlan Kirwan Q&A: Valentin Stalf, CEO of N26

Kehlan Kirwan interviews Valentin Stalf, CEO of top European fintech company, Number26. N26 has recently won a banking licence, as it plots to become a player in the consumer market. Mr Stalf explains its plans.

What is N26?

From the beginning of N26, we said that retail banking for a lot of young people is not up to date. So what we’ve tried to build over the past few years is a retail banking experience that is really mobile first. 

It is something that people are used to already. We have Uber and Spotify, mobile applications that bring real world products. We’ve done a pretty good job up to now and have around 200,000 customers in Germany and Austria. We’re reaching out to more countries as we recently just got our own banking licence.

How did you get that banking licence for a company that has no high-street presence?

Our concept from the very beginning was about winning the customer. That being said, at some point you’re going to have to add more as you grow. For us, that meant you needed to get a banking licence so that we could begin to offer products and services to our customers.

For us, it was always clear that a lot of the old banks were missing that customer interaction. When you focus on the customer first you see tremendous success and new sign-ups like we have. The more we grew the more products our customers asked for and so it became inevitable that we would need to get the licence. 

Getting a banking licence doesn’t happen very often and so it’s not something that a lot of people can give you an insight on. We brought together a really good team who drove the application process and worked with the regulator to make sure we had everything up to code. The regulator went through our business model and we had what they were looking for.

How do you compete with the high-street banks, though?

For us, it’s really been customers referring us to other customers. So our main growth channel has been the virality of our products. And that has its origin in the product that we have built. 

So people are really fascinated by our apps and giving them the simplicity that they are looking for. When people like something, when it works for them, they are more likely to recommend it. 

So we are seeing people use our platform and then show it to friends and family. That has been a big driver of our growth. We have a five-star rating of trust on the app store and that instantaneously tells people this brand is to be trusted and is secure. 

That is much more important than taking out a big newspaper ad or something like that.

You need to win the customers. Getting the banking licence also creates that element of trust because we had to go through a rigorous application process and still been approved to get the licence. That says a lot about how good the product is and how we operate as a company. 

Many traditional banks use their banking licence as an excuse to not be innovative, blaming their licence for constricting what they give their customers. For us, it is because we have the licence that we can be much more innovative and offer customers something more than they are getting. Before we had to work with other institutions to offer solutions, now we can do it on our own.

Are you constricted by the licence?

That’s a good question because in general it’s valid in all member states and it’s not valid in a different region. So if we were to branch out to Asia or the US we would need a regulatory licence in order to do that. 

However, I think we’ve learned a great deal in the approval process that we received in the EU. What it says is that we’ve already been approved and so has our business model. I don’t think there would be a big issue for us getting those licences, I do think it would become more complex as we try to enter small markets. 

The US is a huge market, China is a huge market, but when you get down to smaller areas or countries you will need new regulatory licences for each market.

What is the model to make money?

We based this on a couple of fundamental principles. The first one is that we are a lean organisation, we have 140 people who manage 200,000. We also have the IT infrastructure behind it to make that equation work. 

So, because we are so lean, that brings down the costs of the base products that our customers use. We have accounts that are much, much better than most people would find with their traditional banks in the European markets.

We also have our ideals on what a modern bank should look like and how fintech is the model for a modern banking system.

If you look at what’s happening with a lot of banks, it has become a case of trying to unbundle the industry. So fintech is allowing people to hit specifics like just taking investment portfolios or just taking on international transfers. So what we’ve said is that it is unrealistic to become the best in a whole host of niche markets. 

Instead, [we] re-bundle it into a single platform where people can get the best product that suits their dimensions. A few months ago we integrated with Transferwise for international transfers. So now if you want to do an international transfer you can do so within the N26 app and get the best fees. All of this happens on your mobile, in your hand.

Given that, what is the future of N26?

In a few years N26 will stand for the best solution to all of your financial problems. Be it a credit, insurance or savings product. Inside the next 10 years we want to go beyond financial products.

So maybe you’ll be able to book a taxi or a hotel through the app. Finance and your money is central to people’s lives and what they can do. We’re looking to be the main problem solver for the financial strands of your life. 

Obviously, we’re starting out with the banking sector and moving in that space. We’re going to be developing the future of the company in the next few years and laying the foundation of what our aspirations are for the future of N26. 

Most people aren’t interested in researching for hours and hours on things they are looking for. If we can provide a platform that saves people money and time, then that’s what we will become. We will be selecting the best offers, still giving you a choice of course, and building on that trust that is already there. 


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