A German banking app backed by billionaires Peter Thiel and Li Ka-shing (李嘉誠) is trying to woo young consumers with free current accounts as it expands outside Europe.
In a change of strategy, N26 has decided not to offer its clients a wide range of other banking products for now, preferring to build up its international customer base first.
“Regional expansion will take precedence over product expansion,” N26 banking arm chief executive officer Markus Gunter said in an interview. “Some people claim you can’t make money from 20-year-olds, but you can if your costs are low.”
An increasing number of fintechs are putting banking services on smartphones to lure customers away from traditional lenders.
In January, N26 raised new funds ahead of a push into the US, where it hopes to win business from the likes of JPMorgan Chase & Co and Bank of America Corp.
The company, which also offers premium accounts for a fee, has 2.5 million customers in 24 European countries.
The US launch for its app is now penciled in for the middle of this year, with Brazil to follow, Gunter said.
There are no plans to expand into Asia.
N26’s effort to limit its offerings also applies to German clients.
For example, the bank no longer offers a product that lets customers invest in exchange-traded funds.
While N26 still provides services such as granting loans in its home market, these would not be introduced in other countries for the time being, Gunter said.
“It would be easy for others to push us out of the market if we were an attractive bank that offers all kinds of services, but is relatively small,” Gunter said.
Products that are only of interest to a few customers and are difficult to roll out across countries make little sense at the moment, he said.
The aim is to “generate market power through size,” he added.
N26’s fundraising in January valued the company at US$2.7 billion, making it one of Europe’s most valuable non-listed fintech start-ups.
It received US$300 million from investors including Singapore’s sovereign wealth fund, GIC.
“Without the recent round of financing, N26’s international expansion wouldn’t be possible,” Gunter said.
The German company is entering an increasingly crowded market for digital-only banks in the US and other markets.
Large, traditional banks, such as JPMorgan, have touted new mobile-only banking efforts as a way to combat similar offerings from start-ups.
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