N26: Disrupting the Banking System | In Practise

N26: Disrupting the Banking System

Former Head of Growth, N26

Learning outcomes

  • The positioning of N26 in the early days versus incumbent banks
  • Marketing strategies to scale N26 across Europe
  • Challenges and solutions onboarding customers
  • What the large incumbent banks missed about the evolution of the consumer and market
  • How N26 thought about customer lifetime value during the growth phase
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Executive Bio

Matteo Concas

Former Head of Growth, N26

Matteo is one of the leading fintech marketers in Europe. In 2017, he joined N26, the leading European digital bank, as Country Manager of Italy. He was responsible for building the growth and business development strategy where he led the region to be one of the fastest for the Group. In 2018, Matteo moved to Head of Growth for Europe where he was leading all digital marketing channels. Matteo left N26 in late 2018 to found Beesy, an Italian B2B banking platform for SMB’s and freelancers, which later merged with Penta of which he is now CMO. Matteo enjoyed four years of Investment Banking in London before entering fintech. Read more

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Matteo, could you provide some context to the founding story of N26?

N26 started in 2013 and Valentin and Max started it. The whole idea was to provide a pre-paid card for teenagers giving the control, via an app, to their parents. After a year or so, they actually found out, from the clients, that the parents didn’t want to only give the card to their teenagers, but they wanted to use it for themselves, as well. It was much more convenient; it gave more insight to their spending. So they decided to stop and really create something new that was launched in 2015, so that it was really a new way of doing banking, in Europe.

Everything was branchless, with online onboarding and very transparent fees, all basically, wrapped up in a very nice mobile app, which gave that extra user experience, for the clients, which they were missing from the current incumbents, in Germany, at the time.

What exactly was the position in the early days, versus the incumbents?

It really highlighted the differences, in terms of user experience, which was completely digital, instead of going to the branch, and being able to access their funds. Not only that, really being able to understand how you’re spending money. It was one of the first apps with the transaction list done nicely. You could really understand where you were spending money, instead of just having a blank statement saying, payment by card or bank transfer, which is something that still happens, with many incumbents.

The second one was that you can open the account completely online, with a video call. So we were working towards our client’s desires, which is having everything digital. We have already experienced that with travel booking. We don’t want to go to a travel agency, anymore. It was not so obvious, 20 years ago, when the first online travel agencies launched.

The third one is the pricing. It’s very expensive, especially in Germany, to withdraw cash. You have quite a lot of different fees, attached to your bank account. They were coming out in the market, really, with this new proposition – extremely low fees, in fact almost no fees, that, for a certain part of the population, it was a very important issue. That was the position at the beginning. In terms of product, it was a free account. You had a Mastercard and a bank account. Then, as well, there was a premium product, which was priced at 5.90, at the time. It was a black card and, attached to that, you had better benefits, such as foreign exchange fees, when you were withdrawing abroad. Then, the third one was actually for freelancers or self-employed. It was a business account, a business card, which was still free. But you could use it for your business and that was actually an important money factor for the bank, in terms of inter-change fees, which was one of the ways banks earn money, from account spending. For businesses, it is much higher than for personal accounts.

In terms of the core marketing messaging to customers, was it more on the user experience side or on the pricing?

I think it was, actually, both. It really depended on the campaign or the message that we wanted to put over to that target audience. We had different target audiences. There were the innovators, so those that actually found you, the very early digital adopters. For them, it was much more about the experience and even the app, per se. Even priced at €30 a month, which we did not, I’m pretty sure that we could have got some of them, just because of the experience.

Then there are always the money savers. Definitely, for them, you get them through specific channels and price is the most important factor. Even on Facebook, you will have a nice-looking picture, and a written piece, saying zero-euro account, so that becomes the main message. Then the other two were also extremely important. One, was travelers, especially due to the great foreign exchange fees that we were providing to the customers and so it was very attractive for people travelling abroad, particularly from Europe to the UK. The fourth was the experts. In Germany, there are many people who do not speak German, especially in Berlin and it was great to see how many foreigners that were actually creating a community around and physically suggesting, recommending, referring their friends, so that they could, once they came to Berlin or Germany, they could use and bank with a German bank, but that would speak to you in English, instead of German.

Did you take this crossing the chasm approach, where you have the early adopters and then the pragmatists? Did you split it up by what they actually focused on? Was that how you segmented the market, in that sense?

We need to segment the market, depending on what people want. You get them in different channels, as well. In doing a lot of tests, we saw that those were the main targets. With the early adopters, they then worked as ambassadors, as well, so that they created that first wave, inside each market. We saw that in Germany, but we saw that, as well, in France and in Italy. I, specifically, have been the General Manager Italy, for N26 and then, later, Head of Growth Europe. The evangelists and ambassadors have always been very important. Another good channel mix, for marketing acquisition, was coming from referrals. In the app, we put a big emphasis on recommend a friend. Sometimes there is just an icon for that. You have about four or five icons at the bottom but, especially at the beginning, you really put a lot of emphasis on that. That’s not only almost free, because you do pay a benefit to the referrer, but it’s not only that and it’s very cheap. That friend explained, in a lot of detail, why they are using N26, so there is that extra explanation. So you keep the entire different phases of the customer funnel, which from the very beginning, the lead generation, from the company point of view, which is brand awareness consideration.

Then there is the nurturing part, where that person gets much more information and wants to really understand the app or the software or the service. Usually, you look on the website or you go on the blog. The third phase is the sale part, where the person makes the purchase. That friend does that one on one. So the activity that we saw from those people that they were physically using the app every day, was much higher than all the other channels. That was one of the best things you could achieve, in a cycle, with referrals.

Were those early ambassadors, those early adopters that you mentioned, the tech savvy, UX focused customers?

I would not say that, necessarily. Yes, you have some sort of self-selection, in general. What do I mean by that? The world is becoming more and more polarized, in all sorts of areas. One being also, that people like to have everything digital or they still want to go to a branch. Particularly at the beginning, we were getting people who really wanted the digital experience, either for the UI of the app – one of the first logos for N26 was, ‘banking by design’, so it really created a lot of emphasis on that – but it could also have been for the pricing. You have both sides, working in your favor. More on the beauty, which is much more aspirational, as well. Or very down to earth as many people were going there and saying, this bank account is costing me nothing and it works super well. I use it every day and you gave me €15, open it.

How did you make those early ambassadors feel special, apart from the referral fee? Did you spend time with them? How did it work?

We created a kind of welcome package, with goodies, that we were shipping to people who were referring a lot of other friends. We also created a real ambassador program, specifically for universities. We were physically shipping stuff like t-shirts, stickers, etc. So we were working on things to make people feel special, but it doesn’t have to be a big monetary commitment. People feel special even when you just talk to them, making them feel part of the community. We seem to always think that, in order to make someone attached to you, you need to pay them, one way or another.

The other side was also that people really compelled to be part of the N26 community and they loved even putting it on LinkedIn. We had so many ambassadors in the university and that worked similarly well. It took some time, but we had many universities, with a lot of students that put that on their experience. We became a bit like work experience that you want to show when you joined student associations, etc. Not only that, they were also starting to organize events around N26. We would go there, to present the company but then, of course, it’s some sort of mentoring type of activity or event. I was 29, at the time, so they felt quite related to me. I was just a few years ahead of them, so they wanted to know how I got there; what were my issues and what were the challenges that I encountered, after I finished university.

{audio 0:13:23} That’s how we worked around ambassadors. But really, there was a lot of focus on the universities, for us.

Before we move onto the marketing strategy, I just want to refine the question on market segmentation. How did you segment the market, in the early days?

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N26: Disrupting the Banking System

March 5, 2020

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