German watchdog imposes tough cap on N26 customer growth



German banking watchdog BaFin has placed a drastic cap on N26 customer growth in a rare intervention that will slow the expansion of the Berlin-based online banking.

The measure was imposed by BaFin in early October after the regulator grew increasingly unhappy with the organizational flaws of the rapidly growing bank.

As a result, N26 will only be able to accept 50,000 and 70,000 new customers per month until it has resolved a number of specific issues reported by BaFin, compared to an average of 170,000 customers this year.

The move is the latest escalation in a long-standing fight between BaFin and N26, which has criticized the lender’s checks for more than two years.

In 2019, BaFin ordered the lender to remove delays in IT monitoring, establish written descriptions of processes and workflows, and double-verify the identity of some of its existing customers.

Six months ago, the regulator parachuted a special supervisor into the bank to monitor improvements in anti-money laundering controls ordered by BaFin. In September, N26 was fined 4.25 million euros for belatedly reporting suspicious customer transactions to the regulator.

Weekly bulletin

For the latest fintech news and opinions from FT’s correspondent network around the world, sign up for our weekly newsletter #fintechFT

Register here in one click

BaFin’s cap on new customers – painful for a bank that has focused on customer growth since its inception in 2013 – will be officially announced by BaFin early next month after a deadline expires. four-week remedy.

It was disclosed as a precautionary measure by N26 on Monday, alongside a new round of funding of 780 million euros that brought the value of the company to 7.8 billion euros, a record high for a German fintech.

“N26 has agreed with the German regulator to temporarily onboard a maximum of 50,000 to 70,000 customers per month,” the lender said in a statement on Monday, adding that it wished “to lay an even stronger foundation for future growth sustainable “.

N26 added that it could have to refuse new customers, who would then be “temporarily redirected to a waiting list” given “the enormous interest and demand for N26 banking products”. The lender stressed that its existing customers will not be affected.

In a separate statement to the FT, N26 said its “teams have already implemented a number of measures to strengthen governance and compliance structures during this year.”

The lender added that although the measures would have an impact on short-term growth, “we do not expect a significant impact of this temporary change on our business plan.”

BaFin declined to comment.

Valentin Stalf, managing director and co-founder, said in a statement that the latest round table puts N26 “in pole position to become one of the largest retail banks in Europe, all without a single branch”.

U.S.-based tech investors Third Point Ventures and Coatue Management led the latest round of funding, while existing investors also participated, the company said.


Leave A Reply

Your email address will not be published.