N26 on course for 200,000 customers here as it passes 7m worldwide

Digital bank N26 is on course to double its Irish customer base in 18 months as it expects to hit the 200,000 Irish customer milestone this quarter.

That marks an additional 100,000 customers signing up to the German based fintech since January 2020.

The digital bank captured strong growth across its markets in Europe and the US on the back of changes in financial habits since the pandemic struck.

It may also have benefited here from the decision by the two main banks in recent months to change the fee structure for their current accounts which will see a sizeable portion of their customers paying more for their current account services.

N26, and its main rival Revolut, would be seen as contenders to benefit from any shift in banking habits as they can offer their services at what are seen as very competitive rates compared to the traditional 'bricks and mortar' banks.

The German-based bank offers three monthly subscription offerings to customers.

The customer base of N26 in Ireland is predominantly made up of individuals in the 20 to 34 year age category, accounting for just over half of all customers here.

The 18-19 year age group is the fastest growing cohort followed by those aged 65 and older.

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Global transaction values globally across N26 services hit an all time high in 2020 reaching over €5.5 billion monthly.

That reflects the increase in online spend volumes, especially during the lockdowns across its markets in 2020, including Ireland.

Now in its sixth year in operation, N26 operates in 25 countries across Europe and the US, where it has a separate banking license.

It serves 7 million customers across those markets through operations in eight locations including Berlin, Barcelona, Madrid, Milan, Paris, Vienna, New York and São Paulo.

Although growing its revenue base in 2019, the operation continues to be loss making.

Its latest figures - which apply to the 2019 financial year - show that the company made a net loss of almost €217 million.

Much of that was accounted for by an expansion of its operations across Europe, including a new tech hub in Vienna and the US and a tripling of its workforce to 1,500.

The bank grew its net interest income - a key measure of profitability - by 82% in the year to €9.3m while net commission income - which includes subscription and payment transaction revenue - increased by over 150% to €47.5 million.

Revenue of almost €100 million was up from €43.6 million in 2018.

Adrienne Gormley, Chief Operating Officer with N26 told Morning Ireland that, while the digital bank's user base was predominantly younger people, it was proving more and more popular with people of all ages, especially since the onset of the pandemic.

"What we've seen in 2020 is that the offering of N26, which is a fully-licensed bank that offers the full protections and security of a traditional bank combined with the innovation of a technology company, is really resonating."

Ms Gormley said its users were made up of a combination of those who do their every day banking with N26 and others who want to make payments and move money in a cheap and efficient manner.

"Some start to use one or other of our services, such as payments, and then they gradually take up more services," she explained.

"We offer a wide range of every day banking that's free and then we have premium subscriptions that customers can sign up to."

There are also additional charges, such as for ATM withdrawals once a monthly threshold of transactions is exceeded.

On the endeavour by the main retail banks here to work together on developing services to rival the likes of N26, Ms Gormley said it was gratifying to see the model being replicated.

"It's a recognition that customers are demanding a different way of doing banking and it's a validation of what N26 is offering. 

"We've the foundation of a fully licensed bank and we will continue to focus on the customer experience."