Smartphone bank N26 on its way to the profit zone
The smartphone bank N26 wants to become profitable in the foreseeable future. The two N26 founders Valentin Stalf and Maximilian Tayenthal announced in Berlin that the bank will earn money in at least a few months in the second half of 2024. In 2022, however, the figures were still deep in the red.
The net loss for 2022 rose by almost 24 percent to 213.4 million euros compared to 2021. However, Berliner Bank expects a significantly lower loss for the current year. The net loss for the year is expected to fall to around 100 million euros in 2023. Gross revenue rose by just under 24 percent to 236 million euros in 2022. For the current year, N26 expects sales of around 300 million euros (up 30 percent).
The high loss in 2022 is due, among other things, to high investments in defensive measures against fraud and money laundering. These measures were demanded by the banking supervisory authority Bafin in 2021. At the same time, Bafin had decreed that N26 may only accept a maximum of 50,000 new customers per month. This limit will now be increased to 60,000 new customers per month on December 1.
How the business is to be boosted further
Tayenthal said that the company had invested more than 80 million euros in personnel and technical infrastructure to combat financial crime in 2022. With the help of artificial intelligence applications, N26 is now able to recognize with a high hit rate whether an account opening is a fraud attempt or not. More than 300 data points are evaluated in real time.
The security measures taken have reduced the number of suspected fraud cases recorded by law enforcement authorities by 95 percent in the period from January 2022 to September 2023. Against this backdrop, N26 founders Stalf and Tayenthal are hoping that the Bafin will further relax the growth restrictions or remove them altogether.
However, N26's business will not only be boosted by additional new customers in the coming year. In the first quarter of 2024, N26 will also make it possible to trade ETFs (exchange-traded funds) directly in the app. Later, it will also be possible to buy and sell individual shares in the app. N26 is cooperating with the start-up Upvest. The Berlin-based financial services provider, which offers the brokerage and custody of investment products via a program interface, is also used by N26 competitors such as Revolut and Vivid.
N26 is active in 24 countries in Europe and employs around 1,500 people, including around 1,000 in Berlin.
N26's plans to boost its profits also involve expanding its services in the telecommunications sector. Starting from the first quarter of 2024, users will be able to trade Exchange-Traded Funds (ETFs) directly within the N26 app, thanks to a partnership with the startup Upvest. In addition, the app is expected to soon allow buying and selling individual shares.
The expansion of banking services into the area of telecommunications could potentially attract more customers and increase revenue for N26, which currently has a substantial online presence and operates in 24 European countries.
Source: www.dpa.com
