German Neobank N26 Sees 40 Pct. Customer Increase Since Summer

German smartphone bank N26, valued at $3.5 billion by investors, now has 5 million customers, co-founder Valentin Stalf said. Berlin’s most valuable FinTech startup grew from the 3.5 million users it reported in the summer of 2019.

“We added more customers in 2019 than we did in all the prior years put together,” Stalf, 34, added in an interview.

Stalf would not divulge financials or share market demographics, but noted growth at N26 was strongest in Germany, France and Austria, with Italy and Spain poised to show similar expansion.

Founded in 2013, N26 has raised a total of $683 million in financing. The last funding round in July 2019 produced $170 million from investors including Valar, Tencent and Insight Partners.

In 2019, N26 began operating in the United States. Nicolas Kopp, the U.S. CEO, said in a PYMNTS interview that growth came after N26 evaluated domestic customers’ online banking perceptions and preferences.

“You have a market that has high-level phone penetration, [and] people are really tech-savvy and are used to trying out new products,” Kopp explained. “At the same time, I think some of the payment and banking infrastructure is fairly outdated. I think that combination … made [it] a really attractive option for us to expand into the U.S.”

Kopp also detailed some of the differences between American and European banking customers and how N26 adapts to them.

“Another key consumption difference for our users is [that] people have lower savings rates here in the U.S., so their affinity [for] credit products, credit cards, loans, overdrafts — whatever it may be — is higher versus, for example, comparing it to continental Europe,” Kopp said. “It is hard to generalize, because Europe is such a different market in many aspects, too, but … savings rates in the U.S. are [about] five times lower than what they are in Germany, so [we opened] a few specific products … to help address that difference here in the U.S.”