The Mobile Bank N26 launched its premium accounts to customers in Slovenia. On this occasion Slovenia Times spoke with Sarunas Legeckas, General Manager of Greater Europe Markets.
What was the vision of the N26 founders in such a conservative industry, where the “name of the game” is TRUST?
The name of the game is trust, but the whole industry lacks innovation. Maybe banking is too slow because we want to provide trust in a way that new generations do not respond to,and because we are hindered by regulations.
I think the founders were looking from a consumer perspective. They were just two guys from Austria who were dissatisfied with the available banking products, which they considered were complicated, expensive and non-transparent. They were not bankers, they had nothing to do with banking at all. They simply came up with this idea to create a fully digital bank without any physical branches because they did not think it would be relevant for future generations in particular.
They created N26 seven years ago and it has been a very good journey so far. Maybe you have seen in some of our press releases that we have just announced five million customers in 26 countries globally. About half a year ago, we became the first global retail bank when we launched N26 in the United States. We have 250,000 customers there.
We are also very happy to be present in Slovenia. While it is a relatively small market, we have more than 40,000 customers here today. Last year, these numbers grew very fast, which is why we took this chance to come and meet you here, locally, with this great news of launching our premium offering here.
Who invested in your project in the early stage?
In the very early stage, some of the angel investors were mostly local entrepreneurs from early FinTech payment companies, who actually still sit on the board. We also got some of the Zalando board members to invest. And then, in the seed stage, we had smaller, local, seed investment funds.
Why should people trust their money to an organisation that is only seven years old rather than to a traditional bank? Do you have a full banking license from the European Central Bank?
This is where people usually get confused. They think that a fully digital bank has a lower bar of security or compliance regulations, which is absolutely not the case with N26. We have held a banking license granted by the European Central Bank for four years that we are using in different countries, including Slovenia. We are as safe, regulated and compliant as any other bank in Slovenia, Portugal, the UK or elsewhere.
In recent years, N26 was hit with negative anti-money laundering (AML) and compliance news. How did that impact your reputation?
We received some recommendations from BaFin. As you know, BaFin is one of the most thorough regulators in the whole of the European Union. We took the best of our efforts to comply and fix everything that was specified in the documentation because security and compliance are always our first priority.
We doubled the AML team. We have strengthened technologies in the fraud prevention department. We even tripled the customer service. We extended the working hours of the customer service to make it available from 7 AM to 11 PM. We took all of the actions that BaFin recommended plus we made a lot of precautions to avoid any citations like that in the future.
Can you explain more about the demographics of your customers?
I cannot provide the exact numbers but globally our main target audience are millennials, so people aged from 20 to 40 years. But we have older generations as well. I think millennials represent about 60% of our user base, and the remaining 40% are people over 40.
When it comes to Slovenia, the statistics for 2019 indicate that the majority of the users are male. We have 72% male users and 28% female users. But, last year, the female user base grew faster than the male, and so the female user base is quickly catching up which we are very happy and excited about.
In Slovenia, the fastest growing segment was young people aged from 18 to 24. Another interesting fact is that the second fastest growing demographic was 60 years old and above. We need to dig deeper into why this is the case. Digital banks are usually associated with young people, but maybe Slovenians are more willing to try new things. These demographics could also be linked to younger generations asking their parents to become account users so that they could move their money between the family members more easily.
How do you go about securing long-term customers?
We need to look back at why we started in the first place which was to always be on top of the game, introduce the most innovative features and technologies and put our customers at the centre.
Banking is this great service for the masses. What we are trying to build is a very customer-centric approach. We want N26 customers to live their own way and have the N26 bank help them do that. We want to keep the customer at the centre, remain secure at all times and become this new-generation bank.
Because we do not have physical branches and because we are more innovative, we can allow services to be cheaper at the same time. For instance, all of our main services are for free, unless you want premium services. This is not the case with regular banks, which are always trying to charge you in their secret ways that you do not even understand.
Are traditional bank services, such as offering loans, mortgages, leasing and factoring, also something that you will offer to your customers in the future?
I think the long-term vision is definitely to offer all of this, but it is very difficult to tell when exactly this will happen. One thing is that we still believe that we are approaching the stage of basic banking. For basic banking, I need a current account, debit card and a good app with a good user experience to send money and make international transfers.
We are witnessing an incredible demand and growing so fast that we can still only focus on solving the basics. But, at the same time, if we look at our core markets such as Germany or France, we are already experimenting with savings, investment and overdraft products. In the long-term, we will definitely offer all of the regular retail banking services.
Who is your competitor – digital or regular banks?
Regular banks are our primary competition. If you look at our market share it is still pretty small. Incumbent banks are definitely our main competition, so we would like customers to try our service for themselves, eventually migrate to N26 and make it their primary bank account.
Digital banks are our competition on the one hand, but at the same time they are of help because digital banking is in such an early stage that we need to educate people. It is all about education. Every single FinTech player, including digital banks and payment providers, should educate people to not be afraid of trying these new services.
Traditional banks are our main competition, which is why I think that over the next five, seven or ten years, all FinTech players should help one another.
How do you plan to expand your offering in the next few years?
There are quite a few things. We are currently experimenting with the customer experience. We are updating our app as we want to make it even more usable. I keep giving this example that using a bank application or online banking is usually a bad experience.
What we want to bring is a kind of a timeline view similar to Twitter, Facebook or Instagram, where you could always go back, see your transactions and get some advice in terms of your spending habits, savings or the discounts that N26 provides.
We want to put more effort into the customer experience. We just recently launched what we call ‘Shared Spaces’, which are basically shared sub-accounts. These are an upgrade of our sub-accounts, which allow you to create an account to save money for holidays, skiing or a new car. Now, we have launched shared subaccounts where, for instance, you can save money with your son, define the rules as to who can take the money or contribute and so on. It is one of the features.
We also have a really strong focus on financial wellness and the implementation of new user-friendly features and benefits. We are trying to redefine the way that people work with their money and make the experience more transparent. So many times, people would check their account on their laptop and are terrified of what is going to show up when they open it. We are trying to focus on changing that and making it a more fun experience. There are going to be a lot of things coming out around that in the next couple of months or next year.
For more information on N26’s banking products, visit https://n26.com/en-eu/plans.