A German digital bank backed by Tencent, Li Ka-shing and Peter Thiel will launch in the UK today with the aim of taking on the big high street banks and adding to the fierce competition among British app-only banks.
N26, which already counts 1.5m customers across 17 European countries, has started rolling out its banking services to around 50,000 UK subscribers, with a full public launch planned for next month. It had previously talked of plans to launch in 2017.
Giant German insurer Allianz and Thiel’s Valar Ventures are among the investors in the Berlin-based fintech, which has raised $215m (£165m) in capital.
Competitors in the digital-only banking services space include Starling, Revolut, Monzo, Atom and Tandem, all of which are racing to build up user numbers.
Valentin Stalf, the founder and chief executive, told City A.M. he thinks the bank has a “a fair shot to also be the number one in the UK in terms of growth.” However, he added that there is a large enough user base in the UK which has stuck with traditional banks for all of the digital challengers to continue to grow.
“It’s about winning customers from the four big banks,” he said.
The bank will start to offer overdraft facilities in the weeks after the launch, although other credit products will not be available for more than a year.
Stalf was unconcerned by the possible impact of the UK leaving the EU, saying that the temporary permissions regime instituted by the Bank of England and the Treasury will allow the firm to continue to service UK clients even in the event of a no-deal Brexit. N26 has been regulated by the European Central Bank for two years.
“It’s easier than traditional companies to deal with uncertainty,” Stalf said. “A a start-up we have been used to uncertainty.”
“The time is really right to build a global bank that has over 50m customers,” Stalf said. “Our vision is really to be a global brand.”
Around 6,000 new users join N26 per day across Europe. It has attracted €800m (£712m) in deposits in Europe so far, a figure which is expected to break the €1bn mark by the end of the year. The firm expects to make an operating profit from each user by the second quarter of 2019.
The bank, whose name was taken from the 26 cubes found on the Rubik’s cube puzzle, plans to enter the US in the first quarter of next year, Stalf said, a delay after initial plans to launch by the end of this year.
The US rollout will take place with a partner bank, rather than N26 gaining its own authorisation.
In the longer term the bank plans to branch out beyond traditional current account and credit services, including money management tools such as price comparison for services such as mobile phone contracts.
“I see us also as a problem-solver in the future,” Stalf said.