Blaming Brexit, N26 quits the UK

Blaming Brexit, N26 quits the UK

German mobile bank N26 is quitting the UK, saying that Brexit means it can no longer operate in the country with its European banking licence.

In a statement on its website, the challenger says it will close all UK customer accounts by 15 April. Until then, accounts will work as normal.

Thoomas Grosse, chief banking officer, N26, says: "While we fully respect the decision [Brexit] that has been taken, it means that N26 will in due course be unable to service our customers in the UK and will have to leave the market."

Launched in Germany and Austria in January 2015, N26 entered the UK in 2018, with CEO Valentin Stalf telling CNBC the move was a “no-brainer for us, independent of Brexit”.

However, concerns about the validity of a European banking license in a post-Brexit Britain were live at the time, with another German player, car maker VW, looking to switch to a UK licence.

N26 has not given details on how many UK customers it has, but the firm had a waiting list of 50,000 when it launched in the country and last month boasted that it has five million users worldwide.

However, the fact that N26 has not gone through the motions of applying for a UK banking licence and raising the relevant regulatory capital suggests that the firm was struggling to keep its head above water in the face of strong competition from other UK neobanks, such as Starling and Monzo.

Comments: (6)

Melvin Haskins
Melvin Haskins - Haston International Limited - 11 February, 2020, 16:321 like 1 like

There are 180 countries in the world that do not belong to the EU. Does that mean N26 will not be operating in the US, Canada, Australia, New Zealand and other major countries? How are Santander & Sabatell going to cope?

As you say, I suspect that N26 are struggling in the UK and Brexit gives them an excuse to quit.

Dirk Kinvig
Dirk Kinvig - Finextra - London 11 February, 2020, 16:51Be the first to give this comment the thumbs up 0 likes

I seem to recall that the French owned RCI Bank, spun off a british arm and obtained a licence for their British customers last year. There are definitely alternatives to simply closing up shop.

A Finextra member
A Finextra member 11 February, 2020, 17:171 like 1 like

Gosh, however will we survive without N26? We only have like 100 other challegers.

Bob Lyddon
Bob Lyddon - Lyddon Consulting Services - Thames Ditton 11 February, 2020, 19:04Be the first to give this comment the thumbs up 0 likes

Lol. "A waiting list of 50,000 customers" out of a population of 63 million+...and now they've stomped off back to Deutschland and taken their Fussball within them. Sounds like their offering and/or onboarding processes bombed and they need to blame something other than themselves.

John Davies
John Davies - Incept5 - London 12 February, 2020, 10:21Be the first to give this comment the thumbs up 0 likes

The Brexit uncertainty, i.e. it's all still to be defined, means that FinTech companies don't know if they need separate licenses or if they can use EU licenses. The licenses themselves are time-consuming and expensive to get. You could spend €1-2m to get a license, only to find later that you can passport an EU version or assume you can use an EU license only to find you're locked out of the UK due to compliance.
When you're a start-up FinTech you have to carefully choose your domains, the UK is a crouded space so their decision is probably an economic decision but it's definitely thanks to Brexit. The US is a nightmare for licenses as every state requires a separate liense so that will be another challenge for them. Brexit has just created additional uncertainty and cost so limits both UK FinTechs expandng into the EU and EU FinTechs adding the UK.
It's a shame we got here and I wish N26 the best of luck. 

Andrew Smith
Andrew Smith - RTGS & ClearBank - London 14 February, 2020, 11:46Be the first to give this comment the thumbs up 0 likes

I think this is a sad news story.

I don't agree that the reason is Brexit, though it probably does play a part. If you havent got the numbers you hoped, and you now fear you cannot simply passport your license in (you feel you need to go through the FCA and PRA to get a license to remain a DP of FPS for example) then you will have increased operational costs. So it will play a factor in working out viability within the jurisdiction...

The sad part is that they did have happy customers, that people who bought into N26 have to look elsewhere. I also feel for those staff who have worked so hard on the proposition and the capabilities here in the UK, many of which may now be looking for new employment..... All in all, not a happy story....

I would say though, that i think challengers have to look at their operational models. Being a direct participant in FPS etc is exepensive, in terms of IT infrastructure, IT support but also operational models and collaterlisation. I think many will have to revist their need for licenses and how they want to work. Banking-as-a-Service (BaaS) capabilities are starting to change this landscape, which would make it easier for challengers to get their propositions to market and drastically reduce their operational costs, capital and liquidity requirements..... N26 may prove to be a use case for such providers....

I wish them well