N26 banking on 'pure-play' approach to US market with checking account, debit card

German challenger bank N26 has partnered with San Diego-based Axos Bank to offer an FDIC-insured checking account and Visa debit card for U.S. customers. The products, announced on Thursday, are now available to about 100,000 customers who were on the waitlist for the U.S. version of the app. The company said customers can sign up from their smartphone in five minutes. Since its initial European product launch in 2015, N26 has garnered 3.5 million customers in 24 European markets. In June, the company claimed it executes about 16 million transactions worth 2 billion euros ($2.25 billion) each month. N26's app attracts more than 10,000 new users every day in Europe, primarily through word of mouth and social media campaigns. Nicolas Kopp, U.S. CEO of N26, said he believes that same word-of-mouth approach will work in the U.S. market. Kopp acknowledged that the mobile-only challenger bank space in the U.S. is getting crowded, with well-funded players like Revolut and Monzo poised to enter the market and others like Chime and MoneyLion already having millions of customers. He said N26 sees an opening in the U.S. as more of a 'pure-play' challenger bank offering a checking account and attached card with the basic functions everyone else offers, plus features such as a points and rewards tracker and the ability for users to get their paychecks funded into their accounts two days earlier. Also see: As part of U.S. launch, challenger bank Monzo seeks CEO Kopp said N26 ultimately aims to be a global financial institution rather than a niche player. He said offering a checking account where people can manage their daily budgets is a good start to owning the dominant financial relationship with customers. "Everybody with a smartphone or mobile phone is a target customer," Kopp said. "In Europe, more than 40% of our customer base is older than 35 years old. We actually have a fairly diverse and mature user base in Europe, and I don't expect that to change for the U.S." N26 first announced its intention to enter the U.S. market in 2017, but a number of delays followed. "There's not a single piece that you can identify for taking longer," Kopp explained. "We wanted to take the time we needed to build a quality product and work with customers around the country. I didn't want to be rushed into anything." N26 employs more than 1,300 people in Berlin, Barcelona, Vienna, São Paulo and New York. The bank in Europe has been operating with a full bank license since 2016. In the U.S., N26 operates via a wholly owned subsidiary, where there are more than 50 employees. Kopp said N26 is partnering with Axos Bank for the time being, but it likely will explore its own full banking license in the U.S. in the long term. Among the features to be included in the U.S. version of the app are real-time updates of account activity, automatic categorization of transactions and the ability for customers to set daily spending limits, as well as lock and unlock their cards. There also are no foreign transaction fees on international purchases, no account maintenance fees and no minimum balances required. Each account comes with a savings tool called Spaces, which the company describes as “sub-accounts that help people organize and achieve their financial goals." The savings buckets can be created with a click, allowing users to drag and drop money to and from sub-accounts. Kopp said N26 will not be offering interest on these buckets for now. Founded in 2013, N26 has raised more than $500 million from investors worldwide, including U.S.-based firms Insight Partners and Peter Thiel’s Valar Ventures.

N26 banking on ‘pure-play’ approach to US market with checking account, debit card

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