fintech
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N26 launches its challenger bank in the US
European fintech startup N26 is now accepting customers in the U.S. The company is launching a bank account with a debit card that should provide a better experience compared to traditional retail banks.
If you’re familiar with N26, the product that is going live today won’t surprise you much. Customers in the U.S. can download a mobile app and create a bank account from their phone in just a few minutes. It’s a true bank account with ACH payments, routing and account numbers.
A few days later, you receive a debit card that you can control from the mobile app. Every time you make a transaction, you instantly receive a push notification telling you how much money you just paid. You can set up your PIN code, customize limits, turn on and off online payments, and make ATM withdrawals or payments abroad.
And that’s about all there is to know. But what about fees? Basic N26 accounts are free. There’s no monthly fee and no minimum balance. There’s no fee on transactions in a foreign currency and you get two free ATM withdrawals per month.
N26 is going to progressively roll out signups over the summer as a sort of beta program. If you’ve signed up to the waitlist, you’ll get an invitation over the coming hours, days and weeks. There are currently 100,000 people on the waitlist. N26 will then open signups to everyone later this summer.
When N26 rolls out its final product in a couple of months, the company says that it plans to automatically find and reimburse fees the ATM operators are charging. N26 cards in the U.S. work on the Visa network instead of Mastercard.
Just like Chime, N26 will also try to let you get paid up to two days early if you get paid via direct deposit. Instead of waiting a couple of days to clear those transactions, N26 will go ahead and top up your account.
White label
Behind the scenes, there are a few differences between N26 in Europe and N26 in the U.S. While N26 has a full-fledged banking license in Europe, the company has partnered with Axos Bank, which is acting as a white-label partner in the U.S.
Axos Bank essentially manages your money for you, and N26 acts as the interface between customers and their bank accounts. As a result, you get an FDIC-insured account.
N26 first partnered with a third-party company in Europe, as well. But it was a costly deal that wasn’t meant to stick around. The startup got a banking license in Germany that was good for Europe at large. In the U.S., it’s a different story, as the market is not as unified as in Europe — it’s complicated to get a license to operate in all 50 states.
“We looked at 30 players, we did some due diligence and we’re happy to partner with Axos Bank. The deals that you get in the U.S. for white-label banks are much more favorable than in Europe,” N26 co-founder and CEO Valentin Stalf told me. “It’s a setup for the longer term. It’s good for a couple million customers,” Stalf added later in the conversation.
Just a start
N26 is already planning more features for the U.S. The company plans to roll out two premium plans — N26 Metal and then N26 Black.
And it sounds like there will be some changes when it comes to perks for premium users. “We took that to a separate level,” Stalf said.
And shared Spaces are finally arriving in the coming months. Spaces are sub-accounts designed to put money aside. You can swipe money from one Space to another or you can set up automated rules.
Eventually, you’ll be able to share a Space with other people so that you can save money and spend money together. It’ll work “like a WhatsApp group,” Stalf said.
N26 currently has 3.5 million customers in Europe and has raised more than $500 million in total so far. There are now a thousand people working for N26 in Berlin, 60 employees in New York, 80 people in Barcelona and a small team of five to 10 people starting soon in Vienna.
“It went from being a small company to being an international company,” Stalf said.
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Revolut opens tech hub in Berlin
Fintech startup Revolut is opening a small tech hub in Berlin. There’s already a ton of fintech talent in the city, as it’s the hometown of N26. The company plans to hire 80 people at first for many different tech jobs, from software engineering to data science, product and growth.
And this isn’t just about hiring talent in other cities. Revolut plans to customize its product a bit more for the German market, and more generally Europe.
In many ways, Revolut still feels like a British app. For instance, if you want to change your card PIN code, the company tells you to use an ATM to change it. This is simply not possible in Germany, France and many European markets.
And the team in Berlin will also work on Revolut’s commission-free stock trading feature, a sort of Robinhood competitor for Europe. The company is also working on an app for children, maybe as an alternative to a first bank account.
There are currently 150,000 Revolut users in Germany. The company will have a local marketing and communications team to expand more aggressively in that market.
It’s still hard to create a global fintech app that works all around the world. People manage their money in different ways depending on the country in which they live. And fintech startups are also realizing that, now that they have a solid product offering at home.
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Bunq lets you track and settle up group expenses
Fintech startup Bunq is announcing a handful of new features today, such as a way to track group expenses without creating a joint account, a web app and better Siri integration.
If you usually track vacation expenses and group expenses from your phone, chances are you’ve been using two different products — a mobile app like Splitwise to track group expenses with your friends, and a peer-to-peer payment app to settle up balances.
Bunq is essentially bundling these two features with Slice Groups for owners of the Bunq Travel Card. Given that the Bunq app already lists all your transactions, adding transactions to a group is easier than with your average group payment tracking app.
After adding other people to your Slice Group, each person can add expenses to the group. You get a list of your most recent Bunq transactions and you can add them to a group. You also can add manual transactions in case you paid for something using cash, for instance.
This is just a group accounting feature. When you add a transaction to a Slice Group, your money remains in your account. But you can see who has a positive balance and who has a negative balance.
When you settle up a group, people who owe money get a push notification. They can then tap on the notification and send money from their Bunq account to your friends’ Bunq accounts.
This feature will work particularly well for groups of people who all use the Bunq Travel Card. But it doesn’t fundamentally change how you manage your money with groups.
Bunq now has two tiers of users. Free users get a travel card with an account that they can top up. Paid users get a full-fledged bank account with banking information.
Multiple paid users can already create joint accounts with their roommates or partner. You can then associate your Bunq card with a joint account and spend money from that joint account directly.
So if you have a Bunq Travel Card, Slice Groups are for you. If you have a Bunq bank account, joint accounts are for you.
Revolut doesn’t try to reinvent the wheel, either, as you can only split individual card transactions with other users. It could take a while to settle all transactions after a long vacation. Revolut also lets you create Group Vaults. Those are sub-accounts to put some money aside and invite other people to contribute. But only the admin can withdraw and spend money from those vaults.
N26 has promised Shared Spaces so that you can create sub-accounts and share them with other people. But the feature isn’t live yet.
Lydia’s take on group expenses works more like Bunq’s joint accounts. You can create sub-accounts and share those accounts with other people. Everyone can then top up that account and attach a payment method, such as a payment card or a virtual card in Apple Pay or Google Pay. You also can move expenses from one sub-account to another. When you’re back from vacation, you can associate your card with your personal Lydia account again.
In addition to Slice Groups, Bunq is launching a web interface to access your bank account. It works a bit like WhatsApp’s web app. You scan a QR code with your phone and you can then control the mobile app from a desktop web browser.
Bunq should also work better with Siri. You can now send money using your voice or change card settings. Finally, the startup has also made improvements to its business accounts with a few new features. For instance, you can now automatically put money aside to pay back VAT later down the road.
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N26 faces banking regulator order about fraudulent transactions
Fintech startup N26 received an order from BaFin, the German banking regulator. According to the regulator, N26 hasn’t been doing enough when it comes to money laundering and terrorist financing. The company has a specific period of time to implement changes and rectify its internal processes.
“Today, BaFin published an order for N26 Bank GmbH. An order is an instruction from them to improve processes within a certain time frame. The order requires us to optimize existing processes to prevent money laundering and increase N26 staffing levels,” the company says in a blog post.
A few articles have highlighted a handful of cases of fraud in recent weeks. Customers tried to use N26 for money-laundering purposes. It took some time before N26 reacted and closed those accounts.
It’s not that surprising given that literally every bank suffers from this issue. For instance, all the big French banks (BNP Paribas, Société Générale, Crédit Agricole and Crédit Mutuel) have been fined in the past for the same reason.
Banking regulators don’t review suspicious transactions directly. They make sure that banks have the right processes and teams to catch the vast majority of suspicious transactions.
As N26 has more than 2.5 million users, it’s been hard to scale its workforce appropriately. In other words, it has been short-staffed. In recent months, the company has been hiring customer support and anti-money laundering teams like crazy, by hiring more people directly and signing deals with subcontractors.
BaFin asks N26 to catch up with its backlog of flagged transactions. The company plans to be done by the end of next week. BaFin also wants to see written descriptions of processes and workflows. Finally, the regulator says that N26 should recheck the identity of some customers and redo the KYC process (“know your customer”). N26 says that it plans to implement BaFin’s requirements before the deadline.
Creating a startup is hard, but creating a bank with startup-like growth is even harder. Banking regulation is tough, and it’s a good thing for N26 customers that BaFin is keeping an eye out. Let’s hope that today’s order is just a bump in the road.
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SoFi launches gig-focused ETF
SoFi is one of the leading fintech startups to emerge from San Francisco and breach the financial markets. Originally started as a way to better finance student debt, it has since expanded to include products targeted at personal loans and home loans.
Today, the company announced a new exchange-traded fund (ETF) product focused on the gig economy. GIGE, which trades on Nasdaq, is an actively managed fund advised by Toroso Investments that allows investors to capitalize on this hot sector of the economy. Toroso offers a range of services around creating and managing ETFs.
The company also announced the creation of an ETF focused on high-growth stocks. That ETF, which trades as SFYF on the NYSE, is designed to identify and capture the growth of the top 50 of the 1,000 largest publicly traded issues.
It has formerly used that growth focus to create two ETFs, targeting 500 high-growth companies under the trading name SFY and a product it called “SoFi Next 500 ETF,” which trades under SFYX, both of which have no management fees.
SoFi’s SFYF fund is composed specifically of public companies that show the strongest growth on three key metrics: top-line revenue growth, net income growth and forward-looking consensus estimates of net income growth.
For its GIGE fund, SoFi defines the “gig economy” as a group of companies that “embrace and support the workforce in which employment is based around short-term engagements that allow for flexibility and personal freedom and temporary contracts.”
SoFi’s new funds add value to investors primarily through providing 1) access to industry disruptors at 2) an earlier-stage point in their growth cycle.
In recent years, more and more investors have been trying to get a piece of the hottest tech companies earlier with a growing number of traditional institutional investors now dipping their toes into startup and tech investing.
Furthermore, a number of platforms and funds were launched to support the high-demand for access to some of the top public and private companies and major disruptive trends, including funds focused on themes such as artificial intelligence, big data, cybersecurity or the next manufacturing revolution.
SoFi argues that its GIGE fund offers compelling value due to the speed at which it offers investors access to new equity issues, as the fund is structured so that most post-IPO companies can join the GIGE within 31 days of IPO, relative to the 60-90 days traditional passive funds that often have to wait to add a newly IPO’d company.
Additionally, because SoFi’s GIGE fund is actively managed, SoFi is also offering fund investors access to experienced asset managers and an alternative to algorithmic, machine-led passive funds that have increasingly dominated the capital markets.
“Our members are excited by high-growth and gig economy companies because these companies are in many cases part of their lives,” said SoFi CEO Anthony Noto in a press release. “We’re giving our members a way to get started investing by buying what they know and investing in themselves.”
The announcement is the company’s latest step in its attempt to further establish itself under the new guard of CEO Anthony Noto, formerly of Goldman Sachs, who replaced former head Michael Cagney in 2018, as the company looks to move further away from dark clouds in its past established by lawsuits, sexual harassment claims, FTC penalties and chunky rounds of layoffs. In the past week, the company also announced that CMO and former COO, Joanne Bradford, will be leaving the company at the end of May, though the split was reportedly long-planned and amicable.
The launch of SoFi’s new investment products also comes just weeks after the company was reportedly in discussions to raise $500 million from the Qatar Investment Authority.
To date, SoFi has raised roughly $2 billion in venture capital, according to data from Crunchbase, with backing from a number of Silicon Valley and Wall Street heavy hitters, including SoftBank, Silver Lake Partners, Morgan Stanley, Founders Fund and a host of others.
Already at a valuation of nearly $4.5 billion, according to PitchBook, SoFi appears well on its way to an eventual IPO. Noto, however, noted in a recent interview with Yahoo Finance that “an IPO is not a priority at this point” for SoFi as the company remains focused on executing on a high-quality sustainable growth path.
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Bud raises $20M to connect banks to fintechs and other financial service providers
Bud, the U.K. fintech that helps banks connect their apps and data to other fintech companies and financial service providers, has closed over $20 million in further funding.
The Series A round sees the company pick up backing from a number of banks: HSBC (which, via First Direct, it also counts as a customer), Goldman Sachs, ANZ, Investec’s INVC fund, and InnoCells (the corporate venture arm of Banco Sabadell).
Others participating include Lord Fink (the former chief executive of hedge fund Man Group), and 9Yards Capital (the VC firm to which George Osborne is an advisor).
Originally launched back in 2016 as a consumer app that wanted to make various financial services accessible from a single aggregated interface, the London-based startup has since pivoted to a tech platform it offers to banks to help them remain more competitive in the Open Banking/PSD2 era. Its tech lets banks create new apps and services that enable customers to manage all of their financial products within a single app.
Essentially, Bud acts as the tech layer that intelligently connects bank account data to third-party financial services, including those provided by fintechs and more traditional financial providers, as well as doing a lot of the other heavy-lifting required to create new consumer experiences from bank data.
“The work we have done with First Direct… is a showcase of features and functionalities made possible by new regulation, data science and relevant connections to fintech and banking services,” Bud CTO and co-founder George Dunning tells me.
“We have built a number of data enrichment features using transactional data to make people’s lives that little bit easier. Connection and aggregation of people’s accounts is the standard now, so we focussed on things like increasing financial literacy. ‘Smart Balance’ is a feature that shows users what they can safely spend and ‘Goals’ help them plan ahead. Our advanced regular payment finder filters and tracks bill payments and if you can save money Bud connects you to a service that will make it happen”.
Many of these features are powered by Bud’s ability to use data to detect patterns and behaviours. “Something as simple as detecting if someone is going abroad and helping them get insurance for their trip using one of our partners from within the app is much better than if you do it the traditional way,” says Dunning.
Other than HSBC-owned First Direct, the Bud co-founder isn’t able to disclose any of the company’s other bank customers. “We are working with a handful of banks across the industry, using open banking and our marketplace of services to solve problems for their customers which couldn’t be solved before now,” he says.
On the fintech and financial services side, Bud currently works with 85 different companies. These include fintechs Wealthify and PensionBee to more established companies like Hiscox and AJ Bell.
One other partner Dunning can talk about is the U.K. government, which Bud is working with as part of the Rent Recognition Challenge to create new solutions for people wishing to get on the housing ladder. “First-time buyers have it harder now than ever before. Work we are just finalising with The Treasury uses rent payments to help people grow their credit history to buy a home,” he says.
Meanwhile, Bud says the new capital will support the expansion of the Bud team, as the company moves to double its headcount creating what it claims will be the “largest team dedicated to Open Banking in the world”. Its current headcount is 62.
Cue statement from Raman Bhatia, Head of digital bank at HSBC Retail Banking and Wealth Management: “Since the start of our partnership with Bud back in 2017, we’ve been impressed with the team’s approach to innovation. They have helped to shape our approach to open banking, working with us to deliver services that makes banking easier for our customers. They stand out as motivated by their mission to help people have a better relationship with financial services”.
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Mooncard raises $5.7 million for its expense platform
French startup Mooncard raised a $5.7 million funding round (€5 million) from Raise Ventures, Aglaé Ventures and business angels. The company provides a service to track and manage your company’s expenses with the help of good old plastic cards.
Corporate credit cards aren’t as widespread in France as in the U.S. and other countries. That’s why fintech startups have been trying to find a way to streamline expenses for French startups.
Mooncard lets you get as many cards as you want for your team. Managers can set different kinds of rules with different limits and validation processes.
Every time you pay with your card, you get a text message with a link. When you tap on the link, you can take a photo of the receipt, add details and submit your expense. Your accounting team can see expenses in real time and share reports with accountants.
Behind the scenes, companies create a specific account for expenses and top up that account. Mooncard works with Wirecard for the banking integration.
So far, 1,000 companies are using Mooncard, such as Air France, Vinci, Virtuo, Ledger and others. Companies pay between €13 and €15 per user per month, and Mooncard plans to have 200,000 users within three years.
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Freelancer banking service Shine switches to paid subscriptions
French startup Shine wants to be the only professional bank account you need if you’re a freelancer. So far, 25,000 people have signed up to the service, and the company recently raised a $9.3 million funding round.
Shine wants to help freelancers in France all steps of the way. After signing up, the app helps you fill out all the paperwork to create your freelancer status. You then get a card and banking information.
This way, you can generate invoices, accept payments and also pay for stuff. Creating an account and basic transactions have been free so far, but starting on January 21st, freelancers will have to pay €4.90 to €7.90 per month depending on their status.
Freelancers who generate less than €70,000 (so-called “auto-entrepreneurs”) will pay €4.90 per month, while others will pay more. This is still cheaper than most professional bank accounts. Existing users won’t have to pay anything.
The company mentioned premium plans in the past, but Shine now wants to create a single plan with a unified feature set for everyone. If you’re more serious about your indie lifestyle and generate a lot of revenue, you’ll pay a bit more.
In addition to that change, the startup is working on some new features. Soon, you’ll be able to generate better exports for accounting purposes. You’ll be able to deposit checks, control your account from a web browser, generate better invoices and more.
But Shine doesn’t just want to build an endless list of bullet points with as many features as possible. The company wants to create the best banking assistant for freelancers. You get notifications for admin tasks and you can ask the support team any question you have when it comes to the administrative part of your work.
It’s not just customer support for the product — it’s customer support for French paperwork. And that has some value by itself.
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N26 launches its premium offering in the UK
Fintech startup N26 recently launched in the U.K. with a single product offering. You could sign up to a free account that gives you free payments around the world, but no insurance and no free withdrawals in foreign currencies.
The company just added a second tier to its lineup in the U.K. And N26 is choosing to focus on N26 Metal in the U.K. You can now sign up to a Metal account for £14.90 per month (€16.59).
In other N26 markets, people can currently subscribe to N26 Black for €9.90 per month or N26 Metal for €16.90 per month. It’s interesting to see that N26 is using its fresh start in the U.K. to simplify its offering and target premium customers. The startup can still change its mind and launch N26 Black later down the road.
Basic customers can pay anywhere in the world without any foreign fee. The company uses Mastercard’s foreign exchange rates and doesn’t add anything on top. But ATM withdrawals in a foreign currency still cost 1.7 percent of the total amount.
Metal customers get the same perks in the U.K. and other European countries, such as foreign ATM withdrawals with no fee, a travel insurance package from Allianz and dedicated customer support.
N26 also provides partner offerings for N26 Metal subscribers. For instance, you can work from a WeWork office for free one day per month. Deals vary from one country to another; British customers get airport lounge access thanks to LoungeKey.
Your mileage may vary depending on your favorite airport, as LoungeKey doesn’t have a lounge in all terminals in all airports around the world. Now let’s see if N26 users outside of the U.K. will get a similar service in the future.
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Revolut gets European banking license in Lithuania
Fintech startup Revolut is now officially a bank. While the startup initially expected to get its European banking license during the first half of 2018, the company has finally come out of the regulatory tunnel with a license in hand.
As expected, Revolut applied for a license through the Bank of Lithuania and is leveraging passporting rules to operate in other European countries. Users will see some changes over the coming months.
First, the company expects to roll out new features in the U.K., France, Germany and Poland. Right now, Revolut is more like an e-wallet that you can top up in many different ways. Users in those countries will get a true current account and a non-prepaid debit card in a few months.
After transferring your money to Revolut’s own infrastructure, funds will be covered up to €100,000 under the European Deposit Insurance Scheme. It should convince more users to switch to Revolut for their salaries and big sums of money.
Eventually, the startup expects to be able to offer overdrafts and loans. All fintech startups end up offering credit at some point as it’s a good way to generate revenue.
There are currently 8,000 to 10,000 people opening a Revolut account per day. Users generate $4 billion in monthly transaction volume.
It’s going to be interesting to see if current accounts will affect growth. It’s currently quite easy to open a Revolut account as users don’t need to go through a lot of KYC processes. This is going to change once the startup starts opening current accounts.
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