The German fintech giant N26, popularly known as a smartphone bank, is on a trajectory towards profitability, according to its founders, Valentin Stalf and Maximilian Tayenthal. Despite grappling with significant losses in 2022, amounting to €213 million, an increase from the previous year, the bank is optimistic about its financial future. The loss in 2022, exacerbated by substantial investments in anti-fraud and anti-money laundering measures, is expected to reduce to €100 million this year. Remarkably, N26 anticipates a break-even point in the second half of 2024.
N26‘s financial journey has been turbulent, with the banking supervisory authority Bafin imposing customer acquisition limits due to compliance requirements. However, these restrictions are easing, allowing the bank to expand its customer base more robustly. Despite these restrictions, N26 has increased the number of revenue-relevant customers by 300,000 to 4 million in 2022.
A notable factor in N26‘s strategy is its response to the changing interest rate environment. The bank had previously invested customer deposits in bonds and similar instruments at low interest rates. With a shift in the financial landscape, N26 is now transitioning to higher-yielding securities, aiming for more profitable returns.
Beyond just increasing its customer base, N26 is diversifying its services. In a significant move, the bank, in partnership with Upvest, plans to introduce the trading of ETFs and individual stocks directly within its app in early 2024. This expansion is in collaboration with the start-up Upvest, a Berlin-based financial services provider known for its brokerage and custody services.
N26, currently active in 24 European countries and employing around 1,500 staff, with a significant presence in Berlin, is navigating its path through financial challenges while innovating and expanding its offerings. As it stands on the brink of profitability, N26‘s journey reflects the dynamic and challenging nature of the fintech industry.