Berlin-based banking company N26 is launching stock and ETF trading in Austria first. The startup’s key markets will receive a wider range of banking products with this product launch.
N26, like many challenger banks, started with a modest product: a mobile app-managed card and a money transfer account. Millions of clients opened accounts since the firm operated better than normal banks (banking applications are generally bad).
The firm grew into other markets and added goods. After years of massive investment rounds and recruiting sprees, the firm is focusing on efficiency and profitability like many digital companies.
After creating offices in the U.S. or Brazil, N26 switched to Europe, notably Germany, France, Spain, and Italy.
Another reason is that N26 doesn’t want to be overstretched. German banking regulator BaFin began investigating N26 in 2021. The BaFin client registration cap remains in place. Only 60,000 new consumers can join N26 every month.
“I hope that we’ll be getting out of any kind of restrictions in the next couple of quarters, but it’s very hard to predict,” N26 co-founder and CEO Valentin Stalf said.
N26 has increased its anti-money laundering measures to comply with regulations. Meanwhile, the corporation has been striving to boost profits and discover new revenue streams for its customers.
N26 introduces stock trading after credit and savings.
To boost average revenue per user, include stock and ETF trading. Upvest and N26 are collaborating on this. Users may drag and drop money from their regular N26 account to this new trading space.
They can then decide how much to invest in an ETF or stock. Users may buy a portion of an Apple or Netflix share for €1 on N26. When selling, customers can reinvest or get the money immediately in their primary N26 account.
N26 costs €0.90 per transaction, and premium clients will soon enjoy a few free trades per month, depending on their subscription level. Stock trading should increase premium memberships due to their high profits.
The first deployment will be sluggish because trading will only be available in Austria. ETFs will be capped at 100, with stocks following. However, the business promises availability in Germany “in the coming months.” Other European nations will follow.
In Spain and Germany, N26 launched savings accounts with 2.6% interest. Customers may borrow up to €25,000 using the app. N26 enables crypto trading in select marketplaces via the app.
N26 is steadily becoming a full-fledged bank with all the usual features. Stock trading app N26 competes with Trade Republic. The fact that N26 has everything in one app is its biggest benefit.
It has almost 8 million clients, including 4.2 million “revenue-relevant” ones. Each year, it processes around €110 billion in transactions and manages €8 billion.
I received unaudited 2023 N26 financial data from the firm. In 2023, interchange fees, subscription income, credit products, and client deposit interest revenue helped the firm earn almost €300 million.
The corporation lost €100 million in 2023. That beats N26’s €213 million loss in 2022. To become profitable, more labor is needed.
“By the end of last year, we were almost already breaking even monthly,” Stalf added. “We continue now. I expect we’ll be profitable monthly as a whole firm in the second part of the year.”
