German-based banking app N26, geared toward younger customers and backed by notable billionaires like Peter Thiel and Li Ka-shing, wants to expand beyond Europe while keeping product offerings simple, according to reports.
The company said it would prefer to expand and build up customers rather than increase its range of products.
“Regional expansion will take precedence over product expansion,” said Markus Gunter, chief executive officer of N26’s banking arm. “Some people claim you can’t make money from 20-year-olds, but you can if your costs are low.”
N26 raised new funds in January with a view to expand into the United States and prying business away from more traditional financial institutions like JPMorgan Chase and Bank of America. N26 also has premium accounts, which cost a fee. It has about 2.5 million customers in 24 countries in Europe.
Even though the company is based in Germany, it will reportedly limit products there as well. It currently offers home loan markets in Germany, but that won’t come to new countries. Also, it will no longer offer a product that lets customers invest in exchange-traded funds.
“It would be easy for others to push us out of the market if we were an attractive bank that offers all kinds of services, but is relatively small,” Gunter said, adding that he would like to “generate market power through size.”
The company was valued at $2.7 billion after a January fundraising round. The company, founded in 2013, has 800 employees in three locations: Barcelona, Berlin and New York.
“Without the recent round of financing, N26’s international expansion wouldn’t be possible,” Gunter said.
Some of the criticisms about the company include a suggestion by German media that the bank’s security and customer response systems have not kept up with its growth. To open new accounts, the bank uses a picture identification procedure and not a video one.
“This approach has been reviewed and accepted by the regulator, which is why we want to stick to the process,” Gunter said.