Fintech Company N26 Looks To Digitize And Disrupt As Pandemic Encourages Online Banking

World Fintech Day, which came and went on Aug. 1, remembers Cosimo Medici, the Renaissance Italian who is largely considered to be the father of modern banking. Today, financial services look to the future as buzzword concepts such as “digitalization” and “machine learning” continue to work their way into the sector.

German fintech startup N26, which has already compiled an impressive customer base in Europe, aspires to make an even bigger splash in global markets.

Benzinga spoke with N26 Chief Growth Officer Alex Weber on the company’s vision for the future of digital banking and plans to capitalize on the shift.

BZ: What advantages are associated with digital over traditional banking, and do you see a trend towards favoring this type of business?

Weber: The key differences to traditional brick-and-mortar banks are around the business model and consumer experience. When you read about articles where traditional banks are struggling, it is often due to the cost structure surrounding branch networks and IT legacy. We came up with a model where we do not have either, which lets us start from scratch and hold our core banking systems in the cloud.

BZ: How do you expand and convince potential customers to pivot away from traditional banks and adopt your services?

Weber: An important selling point today is the digital user experience and the simplicity that comes with it. Nobody really likes to go to their bank branch and wait for a meeting or receive monthly account statements physically in the mail. The selling points around convenience, real-time servicing, and similar components are very compelling arguments.

The barrier to entry is also much lower because the service is free and you can sign up in less than eight minutes. This aspect and convenience are important factors when we think about early adoption and expansion into new markets, where potential customers who are not familiar with digital banking or those who have traditional bank accounts can gradually transition towards our platform.

BZ: How has the pandemic shifted the mindset for digital banking?

Weber: Because people cannot visit their branches physically, there has been an increase in interest regarding not only remote banking but also contactless banking and payment systems. We actually just launched Apple Pay and Google Pay a couple of weeks before the pandemic started. We have made sure that customers can have access to their bank accounts no matter where they are.

When you look at Google Analytics, for example, people are searching terms such as “digital banking,” “contactless payment” and “e-commerce,” which ends up supporting our business.

What will be interesting to see as restrictions loosen is if people choose to spend more online and travel, but also whether or not they choose to go abroad, which determines which economies get whose money. 

BZ: Are there any specific strategies that you are implementing to reduce churn rate and also encourage individuals to become loyal customers?

Weber: In February, we were planning our partnership strategy for the second quarter and thinking about what could be core areas to focus on, especially in Europe. The more premium proposition was travel-oriented because of travel insurance and fees related to money withdrawal abroad.

Once COVID-19 arrived, we very quickly pivoted towards a digital-banking-from-home scheme, which our second- and third-quarter partnership strategy very much reflects. In the second quarter, we had partnerships where our customers could save money on learning languages or purchasing home gym equipment and apparel. We have a partnership with Adidas ADDYY, which is very relevant for our target audience. We try to be contextually relevant and deliver on the promise to make the most of our customers’ money.