N26: What the Incumbent Banks Missed

Looking back, in your experience, in this fintech world, what is it about the customer behavior or experience, that the incumbent banks miss?

They missed, and most of them are still missing, the fact that we have a circular trend. It’s steady but it’s getting there, of people that want digital experiences. I still hear so many incumbents saying, oh, but the branches will never go away as they are important. I still need the human touch etc. I think it’s false. It’s a dream that they are telling themselves. It will happen at the right time, for everyone to move in the direction of having a fully digital experience. In order to have those services, you need to invest now. Not just in payments, but in credit, in wealth, in any new other financial service, as we now also have crypto and all these alternative type of investments, such as crowd funding. Really being able to offer a larger amount of choice, digitally. That’s the other part. They are missing the fact that people don’t just want to buy from you; they are looking around. Being digital, the opportunity cost is zero. I don’t have to buy everything from my bank, as it has been done before. People are able to look around, get information from other studies, other fintechs, that are not just neo-banks, but they are focused, as I said, on crowd funding or money management. Or even, one day, they will come directly from the Apples or the Amazons of this world. They are missing, really, the digitalization part.

As a third point, I think they are really missing the fact that it’s not just changes to the technology. It’s within the bank. We are always talking about how we are pulled back by constraints of our mainframe here or the technology there, etc. That’s one, but if you don’t start recruiting digital talents and change the mentality of your top management, even with the right technology, you will never get there. Many banks are still attached to the old way of doing banking. Not all of them; there are some nice examples. I think that the best one we have in Europe is BBVA, one of the main banks in Spain. They are a very forward-looking type of management. Ten years ago, roughly, the CEO told the bank, we are now a technology company, in a shareholder meeting. It takes time to move in that direction, so these are the things, I think, incumbents are missing.

From a marketing perspective, what are the biggest lessons that you’ve learned, in scaling the customer base for N26, in those early days?

The biggest learning was patience and believing in your strategy. I really saw the stress of not achieving the targets. We had this 100,000 objective, from when I started, to get 100,000 customers in a year. We actually did it in 13 months, but at month 10, we were at 40,000. You can imagine, the stress was high. We were 60% away, after 10 months, with two months left, to achieve the target. Really believing in your strategy. Short term is sometimes subjective. Is it good, 100,000 in a year, or six months or 18 months? You never know. Really believing that what you are doing is the right thing to do and you still need some time, sometimes, to really get the full fruits. It’s a lot of seeding, which was, for us, going to banks, raising the issues of the ID card, to get things moving in the product, so that it could get prioritized to change. It was a huge project, of course. This test of the social media influencers but also, the other test done before, in order to find the right targets. So really, patience, often, is a good thing. Knowing that you have done your homework, so that you really believe in what you’re doing.

What happened in that specific example? You had two months left; what was the inflection point?

We really started gathering good, organic growth, from what I was explaining before. More and more people were looking for N26 on Google, which was already the first KPI that you monitor. At the beginning of 2018, we implemented the new KYC, photo, to increase conversion which, for Italy, was four times, because we went from 20% to 80%.

Was that onboarding?