N26 Fintech to stop Operations in UK, citing Brexit as main reason

N26 were originally operating in the UK, utilising a European financial passport and had, back in 2018, assured customers and press alike that they were “working with British regulators to attain the necessary authorisation in a post-Brexit UK and do not expect customers to be affected by any transition.” Fast forward eighteen months and the bank now plans to close all of its UK accounts on the 15th April 2020, due to not being able to operate in the UK with its European banking licence. This will affect around 200,000 customers, who have been asked to move their money to other accounts.

In this article from The Financial Times, a blog on N26’s website, entitled “How N26 is preparing for Brexit,” stated that “Whatever the outcome, your account is protected: we are 100% focused on ensuring minimum disruption to our customers.” According to The Financial Times, this blog had been removed  on Tuesday 11th February.

What does this mean for N26?

The Chief Banking officer, Thomas Grosse, said in the press release that “Although we will be leaving the UK, we will continue our mission to radically transform the global banking industry through innovation and the power of technology. This means growing within the European Union, where we recently crossed the 5 million customer mark, building our presence in the US, one of the most attractive global banking markets, and expanding into new countries.”

According to a blog released on the 11th February, N26 stated that they are still committed to their original vision to “transform the global banking industry for the better.” They say that they have five million customers worldwide and that their recent entrance into the US market has been successful, with more than 250,000 customers joining them in the preceding months. The withdrawal from the UK market doesn’t seem to have dampened their original goal and they are investing more into their mobile experience and product offerings. However, this is of little comfort to the UK-based customers who, according to this article on CNBC, have been left feeling “‘outraged” and ‘betrayed’ by the firm’s decision to leave the U.K.”

A Competitive Market

However, despite N26’s assertion that Brexit is to blame for their withdrawal from the UK, it has been suggested, for example in this article in the Financial times, that the bank had struggled to gain a foothold in the UK market and that it hadn’t realised the scope or complexity of operating in such a competitive arena. The bank entered the UK market in late 2018, over two years after the Brexit referendum and with, ostensibly, only six months until the original departure date. This has lead some to question the veracity of N26’s claims that Brexit is entirely to blame.

With Revolut, Monzo and Starling already successfully operating as challenger banks in the UK and with the complexities involved in securing a licence, it has been suggested that it may have been a simpler option for the bank to withdraw from the UK.

Indeed, Monzo has already released a blog about N26’s withdrawal, in which they encourage previous customers of the German bank to transfer their funds to a Monzo account before the 15th April. The blog outlines what will happen to N26 bank accounts in the UK and then provides information on setting up a Monzo account, as well as stating clearly that they “have a banking licence in the UK, which means we can keep operating here as normal after Brexit.