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FinTech strategy deep-dive and benchmarking collection by
Photo by N26
In Pursuit of Profit: N26's Urgent Drive to Stay
Competitive
FinTech Strategy deep-
dive and benchmarking
collection
●C-Innovation offers you access to high quality, actionable,
business-oriented reports.
● Over the next few months, our teams will be compiling
research on a number of successful FinTechs, taking deep
dives into their company history, culture, success, competition
and outlook.
●By placing FinTechs under the magnifying glass, we offer a
better understanding of the factors that enabled them to
become challengers in the financial services industry, as a
guide for actors seeking to reach similar exponential growth.
● These reports aim at providing actionable insights and
benchmarking to those interested in the financial technology
industry, and more specifically, to businesses and
entrepreneurs seeking to improve their strategies and
increase their competitiveness.
Deep-dive#16:
by
Stay tuned for more!
Disclaimer: This report and the data it contains are for the exclusive use of the
person who acquired the report. It may not be used for commercial purposes,
distributed or sold in whole or in part to other third parties without the express written
permission or license granted directly by C-Innovation.
This is not a commissioned report and all data used for the analysis is taken from
Allica Bank’s financial statements and other publicly available sources. The
information presented here is intended for informational purposes only. The opinions
expressed here are those of their authors and do not constitute an offer to sell, or a
recommendation to buy any investment product or service.
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New
New
New
New
”Should we have
built trading and
crypto instead of
launching in the
US? In hindsight, it
might have been a
smart idea.”
Maximilian Tayenthal
Co-Chief Executive Officer & Co-Founder
Source: FT
Image: chadhensley
1. Business Update 3. Competitors
4. Future Prospects
• European Competitive Landscape
• Retail Banking Services
• Banking products
• N26’s Positioning amoge European
peers
• Profitability Race
• Revenue Growth
• Monetization Potential
• UK Countparts benchmarking
• Valuation
• 2024 IPO
2. Financial Metrics
5. Key Take-Aways
Contents • Breaking milestones
• Company overview
• Executive team
• Company Value
• Product Stack
• Marketing
• Business model
• Revenue Streams
• All will be around achieving Profitability
• Market Focus
• Strategic investments
• N26 Financials at a glance
• Key Performance Indicators
• Revenue, Costs & operating loss
• Source of income
• Transactions Volume and customer growth
• Evolution of Customer Deposits
• N26’s Unit Economics
2019
2021
Funded
1.8 million euros raised
Launches business bank accounts
and Consumer Credit Loans
Business Accounts
From the European Central Bank
and becomes N26
Got Banking License
Soft launch in the US
through partnerships with
Axos Bank and Visa
Launches in the US
Reach 5m customers and
officially leaves the UK.
Doubles customer
base
6
N26’s in 2023 I Regulatory Challenges, Brazil Exit, Valuation Drop,
Customer Growth Impact, & Service Expansion Toward 2024 Profitability.
2014
Seed funding
2015
2018 2017
Lands in Brazil
2016
2013
Launched
In Germany and Austria
through Wirecard
partnership
22 Countries
Expanded to European markets
outside the monetary union
Is Fined €4.25 million by
BaFin for weak money
laundering controls
Compliance Issues
Exit the US market, is
banned from onboarding
more customers in Italy
and officially lands in Brazil.
8m+ Users
Becomes a Unicorn
2020
2023
2022
Leaves Brazil Seeking Profitability
N26 ceases operations in
Brazil, invested in improving
its Compliance Infrastructure
and introduced new Instant
Savings Accounts
Launch of a Trading Product in
partnership with fintech Upvest.
Set its sights on becoming
profitable in the second half of
2024.
67%
$3B
Valuation
$9B
8m+ Users
(Unchanged base since 2022)
Valuation
$3.5B
Valuation
$2.7B
Valuation
2024
2024
N26 Challenges Update I A three-year compliance and security breaches Journey
have significantly tarnished N26's reputation and growth prospects. Little headway
has been made in managing regulatory concerns thus far.
7
Source: BaFin
Timeline of some regulatory challenges faced by N26
2019 2020 2021 2022 2023
• 50,000 New
customers monthly
limit imposed (from
an average of
170,000).
• €4.25m Fine for
lax money-
laundering controls.
• Internal Controls
were required to be
strengthen and
comply with due
diligence.
• Security
Concerns
by Germany’s
financial
watchdog.
• €80,000
was drained
from a
customer’s
account.
• Banned from
New Offerings.
by The Bank of
Italy.
• Prevented from
onboarding
new customers.
• Anti-money
laundering
measures
requested to be
strengthened.
• Extends N26’s
previous
measures on anti-
money laundering
and 50,000 new
customer limit.
• N26 anticipates
raising monthly
client intake to
60,000 soon.
• New customers
are still unable
to join N26, in
Italy with a waiting
list in effect
• BaFin extends
its oversight of
N26's anti-money
laundering
practices.
2
8
17
24
26
25 25 25
24
2
6
9
7
2
-1
0 0
-1
-2
0
2
4
6
8
10
0
4
8
12
16
20
24
28
2015 2016 2017 2018 2019 2020 2021 2022 2023
Number of Countries it has presence New markets opened/closed
8
Source: C-Innovation Internationalisation Blog.
International Expansion I N26 shifts focus to Europe, following rapid exits from US
and Brazil, signaling struggles in international expansion since 2019.
N26 International Expansion Timeline
Just after 18 months,
N26 leaves the UK.
Expansion to European markets outside
the EEA.
First European
challenger bank
launching in the US
Exit the US market
and lands in Brazil
Brexit vote
N26 decided to
withdrawn from Brazil
Period of Unsuccessful Expansion
€ 12 € 29
€ 92
€ 121
€ 190
€ 236
€ 300
-€ 32
-€ 73
-€ 217
-€ 151
-€ 172
-€ 213
-€ 100
€ 36
€ 91
€ 248
€ 212
€ 275
Revenue € Profit/Loss € Costs €
9
C-INNOVATION Note: Cost figures available until 2021. (E) Refers to N26 Expected value
Source: Annual financial statements for the financial year from 01.01.2020 to 31.12.2020. N26 Ltda. expectations for 2023 released by N26 in October 2023.
• Interest Income
• Fees and Commissions
• Other operating Income
• Personnel expenses
• Marketing and admin
• Depreciation & impairment
• Other operating expenses
Revenue Streams Total Expenses
Gross Income, costs & Net Loss
2017-2023 (millions)
>30%
YoY
(E)
(E)
2017 2018 2019 2020 2021 2022 2023
c53%
YoY
Losses persist at consistently high levels I Despite N26's goal of a 30% revenue
increase to €300 million in 2023 and plans to cut losses by 53%, signaling a significant
step towards sustainability, losses persist at high levels.
Source: From Disruption to Profit: The Rise of Digital Banking in Europe's Profitability Paradigm. C-Innovation. 2023
$3.
1B
$4.
5B
$
1
B
10
37
12
11
7
7
With N26 Focus on the European Market I It challenges intensifies, as the digital
banking sector has become an increasingly crowded market.
Note: Non-exhaustive list.
11
Note: Selected examples. Valuation data as 26 April 2023
$45B
$25B
(Publicly listed)
$33B
C-INNOVATION
Previous vs current private/ market cap value
Valuation after IPO
Listed on December 12, 2021
Valuation at latest funding
round. 2021
45%
16%
Valuation at latest funding
round. 2021
$25B
$9B
Valuation at latest funding
round. 2021
$3B
11%
67%
Thus, N26's valuation currently mirrors its market position I Contrasting
with other global brands that have increased their value and navigated successfully
through challenging environments.
$52B
(April 2024)
39%
$25B
(April 2024)
$18B
(2023)
$4.5B
Valuation at latest funding
round. 2021 $5B
(April 2024)
The research team
Javier
12
Javier is co-founder and CEO of C-
Innovation. Having worked with both
technology companies and corporates such
as HSBC and Santander, he has a unique
view of the challenges from both sides of the
table.
For any feedback, comments or any research suggestions feel free to reach us at hello@c-innovation.eu
Giulia
Giulia completed a double degree program
in Digital Marketing & Communication,
studying in both Rome and Lyon. Currently,
she holds the position of Social Media and
Digital Manager at C-Innovation
Stay tuned for more!
This study was carried out by C-Innovation. Do not hesitate to follow us via
LinkedIn to keep you informed of the latest FinTech developments.
To get full Corporate Access of our Reports contact us
Buy N26’s report now
www.c-innovation.eu

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N26 Deep-Dive In Pursuit of Profit by c-Innovation

  • 1. FinTech strategy deep-dive and benchmarking collection by Photo by N26 In Pursuit of Profit: N26's Urgent Drive to Stay Competitive
  • 2. FinTech Strategy deep- dive and benchmarking collection ●C-Innovation offers you access to high quality, actionable, business-oriented reports. ● Over the next few months, our teams will be compiling research on a number of successful FinTechs, taking deep dives into their company history, culture, success, competition and outlook. ●By placing FinTechs under the magnifying glass, we offer a better understanding of the factors that enabled them to become challengers in the financial services industry, as a guide for actors seeking to reach similar exponential growth. ● These reports aim at providing actionable insights and benchmarking to those interested in the financial technology industry, and more specifically, to businesses and entrepreneurs seeking to improve their strategies and increase their competitiveness. Deep-dive#16: by Stay tuned for more! Disclaimer: This report and the data it contains are for the exclusive use of the person who acquired the report. It may not be used for commercial purposes, distributed or sold in whole or in part to other third parties without the express written permission or license granted directly by C-Innovation. This is not a commissioned report and all data used for the analysis is taken from Allica Bank’s financial statements and other publicly available sources. The information presented here is intended for informational purposes only. The opinions expressed here are those of their authors and do not constitute an offer to sell, or a recommendation to buy any investment product or service. Members can access here to our complete library of Digital Banks deep-dives
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  • 4. ”Should we have built trading and crypto instead of launching in the US? In hindsight, it might have been a smart idea.” Maximilian Tayenthal Co-Chief Executive Officer & Co-Founder Source: FT Image: chadhensley
  • 5. 1. Business Update 3. Competitors 4. Future Prospects • European Competitive Landscape • Retail Banking Services • Banking products • N26’s Positioning amoge European peers • Profitability Race • Revenue Growth • Monetization Potential • UK Countparts benchmarking • Valuation • 2024 IPO 2. Financial Metrics 5. Key Take-Aways Contents • Breaking milestones • Company overview • Executive team • Company Value • Product Stack • Marketing • Business model • Revenue Streams • All will be around achieving Profitability • Market Focus • Strategic investments • N26 Financials at a glance • Key Performance Indicators • Revenue, Costs & operating loss • Source of income • Transactions Volume and customer growth • Evolution of Customer Deposits • N26’s Unit Economics
  • 6. 2019 2021 Funded 1.8 million euros raised Launches business bank accounts and Consumer Credit Loans Business Accounts From the European Central Bank and becomes N26 Got Banking License Soft launch in the US through partnerships with Axos Bank and Visa Launches in the US Reach 5m customers and officially leaves the UK. Doubles customer base 6 N26’s in 2023 I Regulatory Challenges, Brazil Exit, Valuation Drop, Customer Growth Impact, & Service Expansion Toward 2024 Profitability. 2014 Seed funding 2015 2018 2017 Lands in Brazil 2016 2013 Launched In Germany and Austria through Wirecard partnership 22 Countries Expanded to European markets outside the monetary union Is Fined €4.25 million by BaFin for weak money laundering controls Compliance Issues Exit the US market, is banned from onboarding more customers in Italy and officially lands in Brazil. 8m+ Users Becomes a Unicorn 2020 2023 2022 Leaves Brazil Seeking Profitability N26 ceases operations in Brazil, invested in improving its Compliance Infrastructure and introduced new Instant Savings Accounts Launch of a Trading Product in partnership with fintech Upvest. Set its sights on becoming profitable in the second half of 2024. 67% $3B Valuation $9B 8m+ Users (Unchanged base since 2022) Valuation $3.5B Valuation $2.7B Valuation 2024
  • 7. 2024 N26 Challenges Update I A three-year compliance and security breaches Journey have significantly tarnished N26's reputation and growth prospects. Little headway has been made in managing regulatory concerns thus far. 7 Source: BaFin Timeline of some regulatory challenges faced by N26 2019 2020 2021 2022 2023 • 50,000 New customers monthly limit imposed (from an average of 170,000). • €4.25m Fine for lax money- laundering controls. • Internal Controls were required to be strengthen and comply with due diligence. • Security Concerns by Germany’s financial watchdog. • €80,000 was drained from a customer’s account. • Banned from New Offerings. by The Bank of Italy. • Prevented from onboarding new customers. • Anti-money laundering measures requested to be strengthened. • Extends N26’s previous measures on anti- money laundering and 50,000 new customer limit. • N26 anticipates raising monthly client intake to 60,000 soon. • New customers are still unable to join N26, in Italy with a waiting list in effect • BaFin extends its oversight of N26's anti-money laundering practices.
  • 8. 2 8 17 24 26 25 25 25 24 2 6 9 7 2 -1 0 0 -1 -2 0 2 4 6 8 10 0 4 8 12 16 20 24 28 2015 2016 2017 2018 2019 2020 2021 2022 2023 Number of Countries it has presence New markets opened/closed 8 Source: C-Innovation Internationalisation Blog. International Expansion I N26 shifts focus to Europe, following rapid exits from US and Brazil, signaling struggles in international expansion since 2019. N26 International Expansion Timeline Just after 18 months, N26 leaves the UK. Expansion to European markets outside the EEA. First European challenger bank launching in the US Exit the US market and lands in Brazil Brexit vote N26 decided to withdrawn from Brazil Period of Unsuccessful Expansion
  • 9. € 12 € 29 € 92 € 121 € 190 € 236 € 300 -€ 32 -€ 73 -€ 217 -€ 151 -€ 172 -€ 213 -€ 100 € 36 € 91 € 248 € 212 € 275 Revenue € Profit/Loss € Costs € 9 C-INNOVATION Note: Cost figures available until 2021. (E) Refers to N26 Expected value Source: Annual financial statements for the financial year from 01.01.2020 to 31.12.2020. N26 Ltda. expectations for 2023 released by N26 in October 2023. • Interest Income • Fees and Commissions • Other operating Income • Personnel expenses • Marketing and admin • Depreciation & impairment • Other operating expenses Revenue Streams Total Expenses Gross Income, costs & Net Loss 2017-2023 (millions) >30% YoY (E) (E) 2017 2018 2019 2020 2021 2022 2023 c53% YoY Losses persist at consistently high levels I Despite N26's goal of a 30% revenue increase to €300 million in 2023 and plans to cut losses by 53%, signaling a significant step towards sustainability, losses persist at high levels.
  • 10. Source: From Disruption to Profit: The Rise of Digital Banking in Europe's Profitability Paradigm. C-Innovation. 2023 $3. 1B $4. 5B $ 1 B 10 37 12 11 7 7 With N26 Focus on the European Market I It challenges intensifies, as the digital banking sector has become an increasingly crowded market. Note: Non-exhaustive list.
  • 11. 11 Note: Selected examples. Valuation data as 26 April 2023 $45B $25B (Publicly listed) $33B C-INNOVATION Previous vs current private/ market cap value Valuation after IPO Listed on December 12, 2021 Valuation at latest funding round. 2021 45% 16% Valuation at latest funding round. 2021 $25B $9B Valuation at latest funding round. 2021 $3B 11% 67% Thus, N26's valuation currently mirrors its market position I Contrasting with other global brands that have increased their value and navigated successfully through challenging environments. $52B (April 2024) 39% $25B (April 2024) $18B (2023) $4.5B Valuation at latest funding round. 2021 $5B (April 2024)
  • 12. The research team Javier 12 Javier is co-founder and CEO of C- Innovation. Having worked with both technology companies and corporates such as HSBC and Santander, he has a unique view of the challenges from both sides of the table. For any feedback, comments or any research suggestions feel free to reach us at hello@c-innovation.eu Giulia Giulia completed a double degree program in Digital Marketing & Communication, studying in both Rome and Lyon. Currently, she holds the position of Social Media and Digital Manager at C-Innovation
  • 13. Stay tuned for more! This study was carried out by C-Innovation. Do not hesitate to follow us via LinkedIn to keep you informed of the latest FinTech developments. To get full Corporate Access of our Reports contact us Buy N26’s report now www.c-innovation.eu