# N26

N26 Bank AG, doing business as N26, and formerly named Papayer GmbH, and Number26 GmbH, is a multinational German fintech and neobank company based in Berlin that offers a variety of financial services to individuals and businesses. N26 was founded in 2013 by Rocket Internet, an incubator, and operates in various European Union member states that are members of the Single Euro Payments Area (SEPA). Their services include transaction accounts and debit cards, as well as overdraft and investment products under a subscription business model.
The name of the company is derived from the number of smaller cubes in a complete Rubik's Cube, since a 3x3x3 cube has 26 individual visible cubes (27 minus 1 hidden).

## History

Founded in August 2013 by Valentin Stalf and Maximilian Tayenthal as a fintech startup under the name Papayer GmbH, N26 initially offered a prepaid Mastercard financial management solution aimed at teenagers, which was launched in February 2014. During an interview with Business Insider later that year, the founders said that their service represented a niche market after receiving many inquiries regarding the availability of a similar service for adults. Subsequently, after securing €2 million in seed funding during June 2014, they changed their name to Number26 and discontinued the teenage finance service to work on a broader transaction account service for general use.
N26 launched their banking product on October 20, 2014 in a private beta. Shortly after launch, they received €10 million in a Series A round, at which point the service has been available in Germany and Austria. During their initial operations, N26 did not hold a banking license; instead, it provided an interface to a backend provided by Wirecard. In July 2016, it re-branded as N26 Bank, after receiving a banking license they applied for 9 months prior by the German regulator BaFin. The company stated that they will start operating on their own infrastructure in autumn that year. At this point, they had over 200,000 customers.
In June 2016, N26 terminated a number of customer accounts. The company said that reasons for these closures included suspected money laundering and excessive ATM withdrawals, with some customers making 15 to 30 withdrawals per month. N26 explained that while it offered free withdrawals, it incurred a cost of up to €2 per withdrawal in Germany, and that the volume of withdrawals by some users created a financial burden that could not be sustained across its customer base. The same month, N26 raised $40 million in a Series B round.
When N26 started asking customers to transfer their accounts to the banks own infrastructure in November 2016, customers had to get a new account IBAN. Accounts previously held by Wirecard would be terminated. However, many customers reported issues during account migration, with many issues to get in touch with their customer support. N26 apologized and was transparent about what happened, saying they were overwhelmed by a large amount of customer support queries, even after initial preparation. However, they did not comment on other reported issues such as funds going missing and other software bugs.
N26 made transaction accounts available across 17 Eurozone countries in December 2016. Shortly after, N26 reached more than 300,000 users in March 2017, at which point they were processing over 10 million credit card transactions per year, with a transaction volume of over €3 billion.
Following this, N26 raised $160 million during a Series C round led by Chinese internet giant Tencent Holdings and Allianz X (Allianz) in March 2018. During this time, N26 claimed to have a customer base of 850,000, aiming to have 5,000,000 customers by 2020. This was followed by an additional $300 million in funding in January 2019 as part of a Series D round led by Insight Partners with Singapore's sovereign wealth fund GIC and a few existing investors also participating, putting N26 at a valuation of $2.7 billion. With its new valuation, N26 overtook Revolut as the most valuable mobile bank in Europe.
N26 started letting customers from the United States sign up for a waiting list on July 11, 2019. Due to the differences between EU and the US market, particularly in regards to regulatory schemes for financial providers, N26 partnered with Axos Financial to serve as the provider of its services, insured by the Federal Deposit Insurance Corporation. Unlike in Europe, where they are provided by MasterCard, N26 used Visa cards for U.S. customers. The following week, the company extended its series D round with an additional $170 million investment, valuing the company at $3.5 billion. In May 2020, the company announced the extension of its recent Series D round with an additional $100M raised at the same valuation.
On 11 February 2020, N26 announced that it would cease doing business in the United Kingdom and close all accounts effective 15 April, due to the UK withdrawal from the European Union. The company cited the fact that European financial institutions can no longer operate in the region without applying for a banking license in the UK (rather than being allowed to operate under its EU license), as well as "the timings and framework outlined in the EU Withdrawal Agreement".
Following internal conflicts between employees and the N26 management, the workers of N26's Berlin subsidiaries, N26 GmbH and N26 Operations GmbH, elected works councils to represent the employees of the Berlin offices in November and December 2020. The elections saw approximately 30% voter turnout, resulting in eleven elected works council members. These elections followed attempts to establish a works council in summer 2020, which were reportedly met with resistance from N26 management, including legal actions such as interim injunctions attempting to prevent employee meetings and the establishment of the electoral committee ("Wahlvorstand").
In January 2021 N26 announced the upcoming appointment of former ProSiebenSat.1 Media and Zalando executive Jan Kemper as the company’s Chief Financial Officer. In January 2022, the bank announced that Kemper will also be taking over the role of Chief Operating Officer in addition to his role as CFO.
In October 2021 N26 raised $900 million in a Series E round led by Third Point Ventures and Coatue Management, and joined by Dragoneer Investment Group as well as existing N26 investors. The funding round valued the digital bank at $9 billion.
In November 2021 N26 announced that it would be pulling out of the United States in January 2022, leading to the closure of approximately 500,000 accounts. American customers were no longer be able to use its app after January 11, 2022. The withdrawal was to focus on N26's core European business. The company confirmed this in an official press release and N26's official corporate blog.
In November 2022 N26 changed its legal form from a German Limited Liability Company (Gesellschaft mit beschränkter Haftung – GmbH) to a German Stock Corporation (Aktiengesellschaft – AG). At the same time, a five-member board of directors was appointed, chaired by Marcus W. Mosen. Other members are Jörg Gerbig, Dr. Barbara Roth, Dr. Julian Deutz and Dr. Robert Killian.
In the first half of 2024, N26 partners with Upvest, an investment API provider, to launch a stock and ETF trading product. This product will initially debut in Austria before expanding to the German market.

## Company

According to N26 it employs more than 1,500 people at its locations in Amsterdam, Berlin, Barcelona, Belgrade, Madrid, Milan, Paris, Vienna, New York, Greece and São Paulo.

## Product overview

N26 provides a free basic current account and a Debit MasterCard card to all its customers, as well as a Maestro card for their customers in certain markets. Additionally, customers can request overdraft and investment products. N26 also offers premium accounts (N26 Smart, N26 You and N26 Metal) which offer additional features for a monthly fee.
The account opening process can be completed online via a photo/video identification. The video identification is performed by N26's identity verification partner, IDnow. The available verification method depends on the nationality, the country of residence, and the type of ID of the customer.

### Availability

N26 offers its services in 24 European countries. In Austria, Germany and the Netherlands customers can additionally request a Maestro card.
N26 closed its business in April 2020 in the UK. In November 2021, they also announced that they would pull out of the American market from January 2022 closing all (approx.) 500,000 accounts there.
Some parts of the website and customer service are provided in English, German, French, Italian and Spanish regardless of the customer's residency.

### Mobile payments

N26 customers in several of its markets can use their smartphone for in-store purchases. N26 supports Google Pay in Austria, Belgium, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden and Switzerland, while it supports Apple Pay in Austria, Belgium, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom. Additional countries are added as both Google Pay and Apple Pay gradually expand throughout N26's markets.

### Fees

N26 has a basic account with no monthly fee and charges no fees for basic banking transactions or credit card payments in foreign currencies. In the Eurozone (except Austria and Italy) ATM withdrawals are limited to five per month for primary account holders and three per month for others. N26 charges a €2 fee for any additional withdrawal.
ATM withdrawals in foreign currencies are also subject to a 1.70% fee for basic accounts and are free for N26 You and Metal account holders.
German customers can also withdraw and deposit money at retail locations. While there is no fee for withdrawals up to €999, deposits are subject to a 1.5% fee.

### Security

Customers can lock and unlock their MasterCard through the mobile app without having to contact N26 support. They can also enable and disable it for usage abroad or online usage and modify the daily limits for cash withdrawals and card payments. Funds held in N26 accounts are also covered by all the requisite statutory requirements of a licensed bank, and are protected up to 100,000€ under the German Deposit Protection scheme.

### Mobile transfers

The N26 app can scan the users' contacts in their smartphones and identify other N26 account holders. Using a service called Moneybeam an N26 customer can send funds to these contacts without having to fill in their IBAN. Moneybeam transfers are executed instantaneously at no cost.

## Controversies
### Account closures

In October 2022, it was reported that over 100 customers had their N26 bank accounts closed unexpectedly and without prior notice. One of several included a Ukrainian refugee named Anya Shamaieva fleeing the Russian war in Ukraine who was reported to have lost access to €15,000 and that N26 demanded she prove her identity in order to recover the funds. While many more customers continued to discover that their accounts had been unexpectedly frozen, N26 stated on their corporate blog that account closures, which the company refers to as "blocks", are made in order to prevent crimes from customers who pose a high-risk to the company.

### Anti-Money laundering compliance issues

Following an inquiry made by several German medias reporting that it was possible to quickly open an N26 account with fake identity documents, the bank has been in German financial regulatory authority BaFin's sights since 2018.
In May 2021 BaFin demanded that N26 take actions to prevent money laundering and terrorism financing. And in June 2021, the bank was fined 4.25 million euros by BaFin for weaknesses in its anti-money laundering system. At least 50 transactions were suspicious and occurred between 2019 and 2020. The bank was too slow to report them to BaFin which prevented an efficient inquiry. BaFin also installed a supervisor in the bank.
In 2022 the Bank of Italy halted N26 from taking on new customers after finding money laundering security violations. In addition to the ban on new customers, N26 was also prohibited from offering new products and services to already existing clients in Italy. These include crypto assets.
In addition to the sanctions imposed by BaFin, as well as falling short on obligations to investors, German financial group Allianz announced its intentions to sell its 5% stake in N26 in April 2023. That same year in July, BaFin announced it would be extending its probationary supervision over N26 to ensure full compliance with anti-money laundering prevention.

### Business strategy

In the span of four years, N26 has entered and abruptly exited from the United Kingdom and the United States: two of the west's largest financial markets.
N26 has gathered much criticism for its global expansion and growth strategy. In 2018, the company launched in the United Kingdom. Less than 2 years after launch, N26 announced it would discontinue its services in the UK citing Brexit as a driving factor for inability to continue their business with a license from a European Union member (Germany). Even though the referendum for Brexit was decided in the 2016, and the British government formally confirmed the results in 2017, N26 still cited this as the main driving reason for their departure from the British banking market in 2020.
In 2019, N26 also launched its application in the US with banking services provided by Axos Financial. In November 2021, N26 ceased operations in the US to focus on the European market with account closures being finalized in early 2022. Despite these claims, Forbes magazine criticized N26 for failing in the US because of its refusal to offer innovative product to the already competitive and fast-paced American financial market.
Shortly after telling its US customers of shifted priorities for the European sector, N26 launched in Brazil in May 2023 after announcing the launch to Latin America in 2019, entering the country in 2020, and finally testing the product in 2022. However, in November 2023, they announced that they would cease operations in Brazil.
In March 2023 the company was heavily criticized for dysfunctional corporate governance. In addition to executive flaws, failure in the UK and US markets in addition to regulators in Italy and Germany sanctioning the company's growth contributed to a delay for the company to file for an initial public offering as well a further investment from outsider sources.

### Security incidents

In December 2016 the research fellow in computer science from the University of Erlangen-Nuremberg Vincent Haupert demonstrated how he could take advantage of security vulnerabilities in order to get access to N26 users' accounts. Haupert had already notified N26 of the vulnerabilities back in September 2016. N26 acknowledged the issues and claimed that they had been fixed before they became public, adding that no user account had actually been compromised.
In March 2019 German media reported that customers who had their account credentials stolen found it difficult to contact the bank and resolve the situation. Customer advocates reported that there was a growing number of complaints from phishing victims who were unable to access their accounts and found it difficult to contact the bank. In a widely reported case N26 took more than two weeks to restore access for a customer who had €80,000 stolen from his account. The reports raised the question if the rapid growth of the bank had left it ill-equipped to deal with the increasing number of support cases.

### Works council

N26 management drew public criticism for its opposition to the election of works councils at its Berlin-based subsidiaries, N26 GmbH and N26 Operations GmbH in August 2020. According to the employees, trust in management was on a historical low. Following employee announcements of a company-wide election to form an election committee ("Wahlvorstand"), N26 obtained a temporary injuction seeking to postpone the meeting, arguing that the COVID-19 hygiene concept did not meet the legal requirements. Trade unionists stated that infection protection regulations should not be used to obstruct unwanted employee representation. Johanna Wenckebach, Head of the labor law department at the Hugo Sinzheimer Institute, stated in an interview that hygiene regulations served as a pretext for preventing an event. She said that the company's subsequent organization of an alternative event demonstrated this. Wenckebach also stated that N26 management, in a widely circulated email, explicitly stated their opposition to a works council due to concerns about confrontations and process delays, saying "it is against the values of N26".
To protect the named employees from further legal action, the trade union Ver.di stepped in to host the meeting at an outside venue. After N26 filed another injunction targeting Ver.di, IG Metall, another trade union organizing workers in the tech sector, called for the meeting instead.
The election committee was established in a meeting that took place at the Hofbräu Berlin. The company attempted to stop the meeting through legal means through a second injunction, claiming the venue lacked an adequate hygiene concept, but failed. During the meeting, the police were called over hygiene concerns, but found no violations of current COVID-19 safety measures after the venue operator, Björn Schwarz, confirmed having an approved safety and hygiene plan.
The founders of N26 criticized the takeover of the event by IG Metall, stating that any quickly organized election driven by external parties "would not be inclusive, safe, or representative". They stated their support for a works council but only under adherence to existing laws. They also announced that no further legal steps would be taken against the election process to de-escalate the situation.
The works councils were established in November and December 2020, with a total voter turnout of around 30%. In response, CEO Valentin Stalf apologized in a blog post, stating that N26 supports the right of employees to formal representation.
In May 2022 the employees elected a works council for the second time. According to a media report, members of the works council subsequently reported positive results.