Banking app for GenZ

Germany’s N26 limits offerings to build up customer base first

A German banking app backed by billionaires Peter Thiel and Li Kashing 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,” said Markus Gunter, chief executive officer of N26’s banking arm, in an interview. “Some people claim you can’t make money from 20yearolds, 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 U.S., where it hopes to win business from the likes of JPMorgan Chase and Bank of America Corp. The company, which also offers premium accounts for a fee, currently has 2.5 million customers in 24 European countries.

The U.S. launch for its app is now penciled in for midyear, 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 ETFs. While N26 still provides services such as granting loans in its home market, these won’t 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 added. The aim is to “generate market power through size.”

N26’s January fundraising valued the company at $2.7 billion, making it one of Europe’s most valuable nonlisted fintech startups.

The German company is entering an increasingly crowded market for digitalonly banks in the U.S. and other markets. Large, traditional banks such as JPMorgan Chase & Co. have touted new mobileonly banking efforts as a way to combat similar offerings from startups.