German app-only bank N26 has launched in the United Kingdom. It is now considering another expansion to the US, tentatively during the first quarter of 2019.
The company, which is based in Berlin, is backed by Chinese tech company Tencent, German insurer Allianz, and PayPal co-founder Peter Thiel. It said that its services are now available in Britain, on a limited basis.
At first, a chosen number of “early adopters” will be granted access to the app in the UK. Over 50,000 people have already signed up and are included in a waiting list for the UK launch. They will be on-boarded on a phased basis. Next month, a broader launch can be expected.
N26 provides a mobile banking app as well as a Mastercard debit card. It will also run without a single brick-and-mortar branch and will not charge fees on transactions. On the flip side, it said a fee of 1.7 percent will be charged on cash machine withdrawals for UK users when travelling abroad with a standard account.
A number of products will be made available for users of its platform, though the features beyond the basic account will not be offered to UK users until after the launch, said N26.
The company has been in the field since 2013, placing it one of the oldest digital “challenger banks” aiming to take on bigger lenders.
The company expects to expand into the US market in 2019. Even though it has banking license recognized in Europe, the company isn’t authorized in the same manner in the United States, compelling it partner with an American lender, which hasn’t yet been named, in order to penetrate the country.
The US expansion was previously planned to kick off before this year’s end, but Chief Executive Valentin Stalf stated that he is “happy” with the new timetable.
“I think it’s always – if you look at products’ release cycles and so on – it’s very hard to predict,” he said during an interview. “I think currently we’re very confident to do that in Q1.”
On the other hand, in the midst of all the boom in the fintech industry, many companies are still struggling to turn their big ideas and competitive pricing into profit. Virtually zero among the digital challenger banks earn more money than they lose. Even the competitor firm Revolut, which broke even for the first time last December, said last month that it recorded a $19.3 million annual loss in 2017.
Stalf said N26 could break even by the second quarter of 2019 as it has hit a point where it can soon become a profitable company.
“For us, I can say, if we want to break even, we can do that in Q2 next year,” he said. “It depends on how much we can put into growth.”