Fintech/News/

N26’s losses widen after compliance spending push

The German challenger bank has continued hiring this year, and ramped up its spending on regulatory compliance and fraud prevention

By Amy O'Brien

N26’s net losses rose 14.4% to €172.4m last year, the German neobank reported as it focused on addressing its compliance headaches. 

The fintech attributed its increased losses to a 31% increase in spending on governance, compliance and online fraud prevention frameworks, as well as continued hiring — at a time when many of its competitors have frozen hiring or are making layoffs. The company’s fiscal year runs through December 31.

“2021 saw us solidify our position as a leader in Europe’s digital banking market,” CEO and cofounder Valentin Stalf said in a statement. “We made further investments in our product, in our team, and in the scalability of our platform.”

The figures come after Stalf admitted to Sifted earlier this year that the company should have invested more in compliance earlier after years of headaches which most recently include a fine in Germany and a new client ban in Italy. The neobank’s hiring push comes amid struggles with employee retention — which Stalf also told Sifted that N26 had taken steps to improve.

The neobank also reported a 70% surge in net revenue to €120.3m driven by stronger customer engagement, a growing user base and higher interest rates. 

Users and transactions both growing 

N26’s user base grew by over 1m in the year to 8m customers — of which 3.7m were what it called “revenue-relevant” in a statement accompanying the results. 

Transaction volumes increased by around 60% to over €80bn during the year, which Stalf attributed to the bank’s growing user engagement.

On average, customers log in to their N26 app three times a week, making us the mobile bank with the most active customer base in Europe,” Stalf said in a statement accompanying the results.

The figures also reflect a period when the neobank made a high-profile exit from the US in November 2021 — that failed venture contributed €28.8m to its losses for the year. This US departure was N26’s second short-lived attempt at expansion outside of the EU, following its exit from the UK in 2020

In an interview with Sifted earlier this year, Stalf said N26 plans to go deeper into Europe by fending off its neobank competitors and launching new products, before a second attempt at global expansion once the bank has “reached 15-20% market share in Europe”, up from single digits at the moment.

N26’s existing core European markets are Germany, France, Italy, Spain and Austria.

Amy O’Brien is Sifted’s fintech reporter. She authors Sifted’s fintech newsletter and tweets from @Amy_EOBrien.

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