N26, the Berlin-based challenger bank formerly known as Number26, has been awarded a full banking licence in Germany, aiding its push to expand its mobile banking service across Europe.
The lack of a banking licence has led N26 to rely on Germany-based financial services firm Wirecard to offer banking services in exchange for a fee. Not only will N26 be able to reduce these fees, it will also be able to offer its own services, improve its underlying technology and expand to other countries in the EU says the company.
“This banking licence is an important additional step for us to sustainably change the value chain in retail banking,” said Valentin Stalf, cofounder and CEO of N26. “This will allow us to significantly enhance the diversity of our product portfolio."
N26 is one of a number of digital-only banks to have applied for a banking licence in recogntion of the need to develop scale and a broader rnage of services if they are to effectively compete with incumbent high street banks as well as other so-called challenger banks.
Earlier this month UK challenger bank Starling was awarded a banking licence ahead of its planned january 2017 launch. And in March the German banking regulator BaFin awarded a banking licence to Berlin-based tech company solarisBank which is looking to offer its platform to digital-only banks.
N26 is currently only available in Germany and Austria but Stalf says that it could launch in the UK later this year or in early 2017, despite the current uncertainty in the fintech sector as a result of the UK's Brexit vote.
N26 has raised more than $50m to date including a round that raised $40m in June, the second biggest fintech investment in Germany, and featured Silicon Valley billionaire Peter Thiel as one of the investors. However, the company also suffered a PR embarassment that month, prior to its recent rebranding, when 400 customers had their accounts accidentally closed.