May 10, 2019

Business Model Canvas – N26

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Quick Pitch – N26 is ‘the Mobile Bank,’ one of the world’s top challenger banks based out of Germany, offering the ability to open a bank account in ‘8 minutes’ and use the N26 card almost anywhere with no fees.

2021 Update

“Brazil may be an optimal market for N26 to try honing both its brand messaging and new business model in order to bring back the rapid growth the company saw in its earlier years.”

N26 Brazil Strategy

How Does N26 Make Money?

N26 offers a free basic account and then has two-tiered Subscription options from there:

As a benchmark, approximately 30% of customers in the UK market signed up for the Metal account.

“Mr Stalf also said about 30 per cent of UK users had signed up for the bank’s premium account, which charges a £14.90 per month subscription fee and offers a metal debit card, plus perks such as travel insurance, discounted hotel bookings and WeWork membership.” FT Jan 2019

N26 also makes #UsageFees depending on the account and usage. Basic accounts, for example, are charged a 1.7% forex fee when withdrawing money abroad. There are also limits to the number of ATM withdrawals, and other triggers for fees depending on the account type.

The company offers #BusinessAccounts where they make additional revenue based on value-added services, and then offer other layers in their core product such as #Insurance in categories like Household, Automotive, etc.

Community-Centric or Commercial-Partner Strategy?

Compared to some of the UK Challenger Banks, N26 seems to be more commercial-partner focused and less community-driven. While competitors like Monzo and Revolut both have large, active online communities, N26 has taken a more traditional approach to marketing and customer support.

On the retail banking side, the company targets young Europeans aged 18-35, with the goal to acquire approximately 5-10% of that demographic from traditional banks by 2020. They have acquired many of these customers through partnerships, but now with their recent foray into the American market, they are starting to ramp up their advertising.

On the customer support front, they have a 400 person in-house team and 200 external agents, handling over 50,000 customer queries per week in multiple languages.

Part of the difference between N26 and other Challenger Banks is likely due to culture and long-term strategies. In addition to taking a more commercial approach to marketing and support, N26 has partnered with firms like Mastercard and Wirecard. In turn, this could lead them down a pathway to a middle ground between more aggressive online-only services and traditional banks.

Overall, as of December 2018, the company boasts more than 2 million users across 24 countries.

Fundraising and Valuation:

Raised to Date: $512mn USD

Earlier this year, the company raised $300mn at a $2.7bn valuation. Earlier backers include Peter Thiel’s Founders Fund and Tencent, while the most recent round was funded by Insight Partners and Singapore’s GIC Sovereign Wealth Fund.

While there is no Revenue, Cost or P&L data available about N26, their growth since their founding in 2013 has been explosive, and will likely accelerate exponentially with the new funding and expansion into the US. According to the CEO, the company is profitable on a per-customer basis and could turn profitable in 2020 if they wanted to – but that will depend on their growth plans amid an increasingly competitive market.

N26 BM Canvas

A business model is defined as:

“the rationale of how an organization creates, delivers and captures value.” 

Alex Osterwalder et al invented the Business Model Canvas to help individuals and organizations conceptualize how to analyze, create, and develop business models.

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Value Proposition

Banking for the Native Mobile Generation:

>No Fee/Low Fee Banking

>Lifestyle Brand – offering features like Spaces and partnership discounts to youth brands

>Business Accounts for freelancers & self-employed. Tools to streamline accounting, etc.


2021 Update

“Meanwhile, the company will begin experimenting with the ‘marketplace model.’ N26 will effectively earn a referral/third-party fee on each conversion of financial-services products”

Strategy & Business Model

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