Maximilian Tayenthal and Laurent Hengesch - The Success Story N26

Summary

In this interview, Max, from M26, a Berlin-based mobile-first bank, discusses the company's journey since its founding in 2013. He highlights M26's unique approach to banking, focusing on a single platform for customers across Europe, and the importance of digital user experience. Max also addresses challenges like KYC, fraud prevention, and the company's investment in technology. He shares insights on the potential for a tailored mobile app experience for each customer and hints at future plans, including an IPO, reflecting M26's growth and the evolving banking landscape.

Takeaways

• 😀 Max, from M26, expresses his initial positive impressions of Luxembourg and enthusiasm for the conference.
• 🏦 M26 is a mobile-first bank based in Berlin, founded in 2013 and launched to the public in 2015, aiming to provide a unified banking platform for Europe.
• 🌐 M26 identified a significant shift in user behavior from offline to online banking, particularly on mobile devices, and capitalized on this trend.
• 💡 The company's niche is offering the best digital user experience with a modern tech stack, allowing them to provide services at a competitive price.
• 🚀 M26 has grown rapidly, raising $1.8 billion and becoming one of the largest challenger banks, with a valuation of 9 billion.
• 🛡️ KYC (Know Your Customer) and compliance have been significant challenges for M26, with investments over 100 million euros into compliance and fraud prevention technologies.
• 💼 Max highlights the importance of hiring individuals without traditional banking experience to bring fresh perspectives to the company's operations.
• 📈 M26 is focusing on tailoring its mobile app to individual customer needs, much like personalized experiences on platforms like Spotify and Netflix.
• 🌟 The company is considering an IPO but has no immediate pressure to do so, preferring to wait for the right market conditions.
• 📱 M26 targets a broad demographic, emphasizing that their appeal is not limited to age but to those with a digital mindset, aiming to be the bank for everyone.

Q & A

What is N26, and when was it founded?

N26 is a mobile-first bank based in Berlin, founded in 2013. It launched its product to the public in 2015.

What makes N26 unique in the European banking market?

N26 is the only bank in Europe to operate on a single IT platform and banking license, onboarding customers across Europe without country-specific limitations, unlike traditional banks that are usually limited to national borders.

What trend did N26 capitalize on when founding the company?

N26 recognized a shift from offline to online and then to mobile banking. They saw that other industries, like travel and music, had already been disrupted by new technologies and predicted that banking would follow the same path.

What is the significance of digital user experience for N26?

Since fewer people visit physical bank branches, N26 focuses on providing the best digital user experience, as the quality of mobile and online banking interfaces is becoming the main differentiator for customers.

What were some of the main challenges N26 faced while scaling?

N26 faced typical startup challenges, like fundraising, maintaining agility, and recruiting, but also specific industry challenges like obtaining a bank license, compliance, KYC (Know Your Customer) regulations, and building scalable systems.

How does N26 handle its KYC (Know Your Customer) requirements?

N26 outsources most of its KYC processes but relies heavily on technology, including machine learning models, to identify customers at higher risk for fraud or financial crimes. This allows the bank to scale efficiently while meeting regulatory requirements.

What role does scalability play in N26’s business model?

N26 has invested heavily in building a scalable backbone. If their systems are built correctly, it doesn't matter whether 50 or 50,000 customers sign up—scalability is a core feature of their platform.

How is N26 integrating AI and personalization into their services?

N26 is working on making its app more personalized, similar to services like Spotify and Netflix. For example, customers with more money in their accounts might be shown investment products more prominently, while those with lower balances might see credit options.

Is N26 planning to go public, and if so, when?

While N26 is exploring an IPO, there is no immediate pressure to go public. The company is waiting for the right market conditions and is currently able to fund its expansion from its own profits.

How does N26 plan to attract Generation Z customers?

N26 targets Generation Z by offering mobile-first banking, which aligns with the way younger users interact with digital services. However, the company has found that many of its users are older, showing that its appeal extends beyond just younger generations.