N26: US Consumer Banking Ready for Disruption


When you ask a group of millennials when the last time was they physically entered a bank outlet, you often get confused looks. Nowadays, going to the bank is considered as popular as going to the dentist. Actually, it’s even worse. Why should anyone take time out of their day to visit a place that is associated with painful experiences, terribly slow customer service and opening hours only until noon? Even an industry as omnipresent and powerful as the banking industry will not persevere if they avoid digitalization, lean operations and the focus on customer experience. These are exactly the forces N26 was used to constantly improve their product since the launch in February 2013.

The small fintech came a long way, now valued at 2.7 bn $ with backing from big names e.g. Insight Ventures, Tencent Holdings, Peter Thiel and Singapore’s sovereign wealth fund GIC. This makes it the most valuable German start-up to date! They closed 2018 with 2.3 M customers and they are among the fastest growing banks in Europe attracting around 2000 customers per day. But what is the hype all about, what does N26 do what traditional players do not?N26 was designed as a mobile bank using a smartphone as the platform for everything they do. It also means that there are no brick and mortar retail branches. This helps them operate with a dramatically lower fixed cost base than other banks. And the solution to the expressed fear of having nobody at your bank you can talk to is simple: User Experience, simply great User Experience. And with a regular banking license, they are working towards serving the customers as a full replacement for any other bank, without the traditional headaches. 

Get started – Opening your account

Even opening your bank account is a breeze. Everything is done from your smartphone app and you can literally open your account in 10 minutes. All it takes a valid ID, an address and a video identification, that’s it, no paperwork. And the best: it is absolutely FREE. After the registration process, they’ll send you classic Mastercard debit in a fancy transparent design which is guaranteed to catch the attention of your friends. Once you receive the card you’ll be asked to pair it with your account on your phone. Follow the instructions and after another 2 minutes you are good to go. The card obviously comes with up to date contactless payments as well as support for Apple/Google pay. This, together with your IBAN and BIC gives you all the tools you need to start your journey into banking of the 21st century and you start to wonder why it usually takes weeks and what you actually pay those ridiculous fees for.Speaking of those fees: You’ll save a lot of money once you start to never pay them again. One of the unique selling points of the N26 debit card is the non-existence of fees when paying at home and abroad. So whether I pay for a beer in Munich, a coffee in New York, a steak in Buenos Aires or a late-night snack at 7-eleven in Hong Kong I won’t be charged the usual fee of 1.25-2.25%. You heard that right, 0% fees all around the globe. But wait, then they surely get their money with unfavourable conversion rates. And yes, while banks usually do both, N26 does none of those things. Looking up the exchange rate on the date of the transaction will reveal that you get the exact interbank rate you’ll find on Google. Again, it is the real, fair exchange rate. No artificially altered rate to profit the bank that provides nothing but a bad service, no foreign exchange fee. The customer is able to spend his hard-earned money at a fair rate and with no fees in a foreign country like a local. It might be hard to believe (especially for your parents) but this is how banking looks like when it is transparent, simple and easy to use. 
The app and what makes you fall in love with N26 over and over again

What makes an app great, what differentiates a decent app from a great one? Design matters, and ultimately the best mobile apps offer an unbeatable mix of usability, simplicity, and personalization. The next time you’re scrolling through your favourite app, you may find yourself noticing these particular qualities that make the app so enjoyable to use. In the N26 app everything moves smoothly, it’s intuitive and has great yet simple looks and feels nice. A nice feature is the automatic classification of all your transactions. It recognizes categories such as dining, transport, entertainment and at the end you can see exactly where all your money went. It’s like having your own personal bookkeeper. 

Functionalities & Features – how N26 makes your daily life easy

After adding funds to your N26 account you are finally ready to fully take advantage of it’s perks. But how do you add funds? There are multiple ways to do this. One of the easiest way is certainly to let your employer know and receive salary onto your N26 account. You will get a notification on your phone once the money is deposited into the account and trust me, seeing that your salary arrived is a really good feeling at the end of the month. In addition your balance is always live, you are not lagging 1-2 days behind. And even the bloggers, expats and digital nomads of the world are covered. Basically, it doesn’t matter anymore in what currency you are getting paid. 

A partnership with TransferWise allows you to have it’s features already built into your account. Transferring money from any account to your N26 account has never been easier. And the same goes for sending money to friends in their home currency. If you want to learn more about TransferWise (click here). The DNA of N26 is digital, so the handling of cash is not what it is best at. Every month you can deposit 100€ at the register of partnering shops displayed on a map within the app but that’s it. After that you pay 1.5% of handling fee meaning that 98.50€ will be shown on your balance for every following 100€ you want to deposit. Other banks often has similar pricing structures which is simply explained with the nature of cash handling being expensive. The same goes for withdrawals. Within Germany you have 5 free withdrawals a month, in the Eurozone there no such limit exists. Withdrawals worldwide will cost you 1.7% markup at the ATM. Given the fact that a contactless payment abroad is free you should think wisely and use N26 to your advantage. Get into the habit of paying by card which will help you unlock the full potential of your N26 account. A showcase for this potential is security when losing your card. A nightmare for every traveller was to lose their credit card or have it stolen. This would usually be followed by painful phone calls to block your card asap. After that you could try to get your card back only to find that once your card is blocked you can’t just un-block it. So you would end up ordering a new one and by the time you get it the trip is usually over. Yes, there are credit card like the American Express Platinum Card that offer worldwide 24h service for a new card, but N26 found an even more elegant solution. With the tap of a button you just block your card in the app. From this moment it can’t be used to pay for anything anymore. And the best thing, if you panicked and blocked your card but found it 5 minutes later under your pillow, you just un-block your card again as if nothing happened. This is again a masterpiece of customer experience adding another layer of security on your trip at home or abroad.The US is an exciting new market which offers a massive opportunity for N26. Though the fintech environment is well advanced there, serving US customers comprises primarily niche and individual solutions. As of yet, we do not see any genuinely mobile bank which is a potential full replacement of any other bank account. The US market comes with it’s own challenges and opportunities. Bank fees are often unreasonable and targeting financially vulnerable households, cheques are more common but also associated with extra cost for cashing them in and the debit cards on the market are often poorly designed systems.(https://www.economist.com/united-states/2015/09/03/its-expensive-to-be-poor) The features inherently built into N26’s mobile banking ecosystem are poised to take the pain out of financial services for many consumers in the US. A majority will enjoy benefits such as:

  • No FX fees! While the account is in euros only, everything is converted at the real exchange rate, with no conversion fee. This means it’s just like using your card in your home currency.
  • You can use it everywhere! It’s just like a regular debit Mastercard, so wherever Mastercard is accepted, your N26 card is accepted.
  • Free ATM withdrawals all throughout Europe is awesome and perfect for travellers. You can easily block/unblock the card and activate other options from within your app. And since everything is done in the app, there’s no need to worry about getting flagged when logging in to internet banking from overseas like you do with regular banks.
  • Support is amazing. They even run support over Twitter – so you can tweet them and get support in real time. If you’ve ever sat on hold with a bank while travelling, you’ll understand how awesome this is.
  • It’s free! Most travel debit cards drown you in fees and loaded rates, including a monthly fee just to keep the card open. With N26 it’s completely free, so even if you never use it you’ve got nothing to worry about.

But most of all, it just removes so many banking headaches that you have while travelling. There are enough things to worry about when you’re roaming the world, and in the past banking and money has been one of the biggest headaches of them all.N26 removes so many of these problems – it really is the perfect card for travellers.

Signing up for an N26 Account

N26 is for EU residents, so to sign up for an account you need to have access to an EU mailing address. If you do, simply head to the N26 sign up page here and fill in your details. The process is all very straightforward and is done completely online. All you need is your smartphone.

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