Frankfurt The Berlin smartphone bank N26 is trying to attract more paying customers with a new account model: the financial start-up (Fintech) is starting the third account with an account fee. The “Smart Premium Account” will cost 4.90 euros a month, as the bank announced on Tuesday morning. For two further so-called premium accounts, the bank already estimates EUR 16.90 and EUR 9.90 per month.
N26 is aggressive. “We primarily want to address customers of established banks who are currently already paying account management fees,” said Germany boss Georg Hauer to the Handelsblatt. “It’s a myth that customers will only choose a digital bank account if it’s free. They take it because it’s better, ”believes Hauer.
With this, N26 is turning a little further away from its approach from the start phase. The fintech, which has been on the market since 2015, initially only offered free accounts for private customers and only later introduced accounts with monthly prices. However, these two accounts are comparatively expensive – more expensive than the standard accounts of most private and cooperative banks and savings banks. Hauer emphasized that N26 will also “always offer a free account”.
In Germany, a number of financial institutions have said goodbye to free accounts, and most of them have increased their fees. In view of the negative interest rates, the important net interest income, the main source of income for traditional credit institutions, is shrinking. Hence, banks try to earn more from account fees.
According to Hauer, N26 aims to have at least 30 percent of customers choose one of the paid accounts. In some markets this is already the case, in Germany around 20 percent of customers pay for their N26 accounts.
According to Hauer, one third of N26’s income currently comes from payment transactions, account management fees and other businesses such as partnerships, credit and savings products. “In addition, we want to grow in the future, especially with income from premium accounts and in the lending business,” announced Hauer. So far, the bank has hardly been active in the lending business.
With a valuation of 2.9 billion euros (3.5 billion dollars), N26 is one of the most expensive German fintechs. The Berlin company is also the largest smartphone bank in Germany. It is active in 25 countries and has more than five million customers – the bank announced this number at the beginning of 2020. The number of customers had grown rapidly in previous years, which N26 had also reported regularly during the year. It is unclear how many customers actually use N26 as their main bank account.
The most recent known business figures from N26 are from 2018. At that time, the bank had significantly increased its revenues, which mainly came from payment transactions. At the same time, however, the loss also increased, among other things because the bank spent more on marketing.
No more short-time work
Hauer said there were no longer any N26 employees on short-time work. “On the contrary, we are currently recruiting a lot of new employees, and that at all locations.” The company has a total of around 1,500 employees. There are currently more than 100 vacancies. Among other things, N26 wants to expand its technology center in Vienna.
With a view to the election of a works council, against which N26 had intervened in the meantime, the bank was now self-critical. “I see the establishment of a works council as positive. The management looks forward to working with the works council, ”said Hauer. “Our communication when it became known that employees wanted to set up a works council was not good. A good work culture and a good working atmosphere are extremely important for N26. ”N26 claims to be an attractive employer and ultimately competes with companies like Google for software developers.
In the meantime, the works council for the N26 Operations division has started its work with almost 500 employees. At the beginning of August, a group of N26 employees made their request for the election of a works council public. Trust in the management was “at an all time low,” they complained.
As a first step on the way to a works council, the employees invited colleagues to two meetings in the “Hofbräu Wirtshaus” in Berlin to elect the electoral board. This is absolutely necessary on the way to the formation of a works council. Against the first invitation, N26 obtained an injunction from the Berlin labor court in August. The bank did a similar thing with the second.
The bank had justified its veto by stating that there was no health or safety concept for such large gatherings in the venue. In the end, the meetings were able to take place as planned, because the service union Verdi first invited the participants, and IG Metall stepped in at the second meeting.
More: Why it could get more difficult for fintechs next year.