N26 to Shutter UK business, closing all accounts and blaming Brexit

Challenger banks are in 2020, what on demand delivery and subscription box startups were a few years ago, there are many, with very few who are really cementing themselves as true category leaders.

It has been a land grab, often which often manifests as a capital intensive race to the bottom, but today N26 have announced they are pulling out of the UK, closing all accounts, Brexit and an incompatible European banking license is voiced as the rationale and main contributing factor to the retreat with the tail between their legs.

But is it Brexit? This has been a topic on the front of newspapers for years, surely if N26 believed they could win the UK, they would of prepared for that eventuality that Brexit would be a huge risk factor that they needed to mitigate and to be prepared for. So, for me this screams more about competition and would allude to consolidation and retreat being imminent in the challenger banking space.

For most of us casual #Fintech observers. It seems to be at least on a European level to be a 3 or 4 horse race between Monzo, Revolut, Starling and N26, often fought out on the battle field of bragging rights, or of who is first mover on not so meaningful differentiating factors, such as features that nobody asked for and for me thats always been my take – nothing really separates them, to entice me away from my bank.

Thats not to say the European challenger banks, haven’t done impressive stuff, Monzo especially stands out, going from a invite only launch prepaid debit card, to expanding as fast as they can. Lets face it, VC’s and big time, financier maestro’s stationed in the Cayman Island’s have been lining up ready to invest and wire them bundles of money to the likes of Starling et all. I just hope they used Transferwise instead of Western Union for the first tranches 😉

On that note, So many forget that Transferwise has the potential to outmanoeuvre all in the coming years. I have noted that whilst the others get lost in the sauce of PR and look at vanity stuff like metal cards and the like, Transferwise have avoided going head to head, much the opposite working with and not against their challenger banking and FinTech peer group. They have avoided fluffy noise and gimmicks like Metal cards, instead keeping it simple, keeping costs down, even their plastic green cards cost around £4, so they have just focussed on revolutionising currency transfer and slowly grown their product offering when it is symbiotic and makes sense.

My take is that N26 have like many scale-ups realised the hard and expensive way, that you don’t need to double down on losing markets, where especially as you internationalise you are swimming in red ocean, nor do you need to win the entire world, to have a globally significant outlier. You simply select the strategic markets you can win and relentlessly execute to own them.

Interesting times ahead, N26 pulling out of the UK could well be less Brexit and more a case of N26 waking up smelling the coffee, realising how capital intensive winning markets like the UK would be, which isn’t ideal in the post WeWork era, thus coming to their senses and knowing what to prioritise. If that is the case I salute them as to go all the way you need to make bold moves.

Wishing n26 and them all the very best. The horse I’m picking is Transferwise, but may the best Challenger win. Game on.

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