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The co-founder of N26, Germany’s highest-valued fintech, has hailed a “great deal of momentum” in customer growth while signalling that the online bank had overcome regulatory hurdles and was on a path towards net profitability.
Valentin Stalf, who launched the company in 2013, told the Financial Times that after a 40 per cent rise in revenues to €440mn in 2024 he expected a 30-40 per cent increase this year, along with “even stronger growth of gross profit”.
The company recorded a net loss of about €20mn last year after selling certain investments at a loss to improve its balance sheet following a change in regulatory risk weighting, according to a person familiar with the matter. The bank, the person added, had been operating profitably since June 2024. Its management intends to double its marketing budget this year to support growth.
Sign-ups for the app-based bank were now “up to 250,000 a month”, the person said, surpassing the 170,000 reported before German financial regulator, BaFin, decided in 2021 to impose a 50,000-a-month cap on new customers. The regulator’s decision stemmed from alleged flaws in the bank’s anti-money laundering controls.
The growth cap was lifted in mid-2024, while a supervisor appointed by the regulator left the bank at the end of the year. The supervisor was with the bank “longer than we had hoped for”, a company insider said, while counting it as a success that BaFin did not prolong the mandate.
About half the sign-ups result in active accounts, according to people familiar with the matter, since not all people who sign up finish the registration process and not all approved customers put money in their accounts. At the end of 2024, N26 reported 4.8mn revenue-generating customers.
The bank has implemented a digital model incorporating more than 300 data points to assign dynamic fraud probability scores to every customer. The system had sharply reduced fraud on its platform, according to people familiar with the matter, at a quarter of the cost of fraud prevention at traditional banks.
Stalf had previously said BaFin’s intervention cost the bank billions of euros in “opportunity costs”.
One company insider admitted management had feared “losing the company’s edge in the market”, given strong growth at rivals such as Trade Republic.
While Berlin-based Trade Republic, originally a broker, is already profitable and increasingly focusing on day-to-day banking, issuing debit cards, N26 has extended its offerings to include investment accounts for exchange traded funds and cryptocurrency trading. Both fintechs are expanding in other European markets, such as France and Spain.
N26 generates roughly a third of its income from fees for premium services, another third from interest income, and the remaining third from card payments and transactions.
Amid speculation about an upcoming initial public offering, Stalf refused to give a concrete timeline, with one person with knowledge of the matter indicating it would not happen for at least another two years.
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