The Berlin neobank N26 is introducing a new account model and is apparently targeting the classic clientele of large direct and branch banks. The offer is called “N26 Smart” and costs $5.8 (€4.90) per month – pretty much exactly what several other banks and savings banks in this country are calling up for their “normal” account.
Interestingly, N26 has not been represented at all in this price segment up to now. Instead, customers were able to choose between a completely free standard account and two premium variants called “You” and “Metal” for $11.7 (€9.90) and $20 (€16.90) per month respectively.
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As a new feature, the “Smart” account includes a “round up” option
The billion-dollar fintech company is embedding the introduction of “N26 Smart” in a – at least as far as the names are concerned – major restructuring of the model range. The previous “You” account is to become the “N26 International” account; the “Metal” account will in the future be called “N26 Unlimited”. N26 said that it won’t change the price of the two premium accounts. However, some features might change. Details will become public early next year.
The new “Smart” account will differ from the free standard account mainly by telephone support – a service that is common for all customers at classic direct banks. This is something you need to know: Two years ago, N26 discontinued telephone support for the standard account and reserved it for the most expensive Metal account. Instead, from now on, customers should only contact the bank via the chat function. Apparently, the Berliners have come to the realization that there is a large group of customers who no longer need a branch office – but still prefer to handle service matters by phone rather than in a chat.
As a new feature, the “Smart” account includes a “round up” option. This means that for each card payment, the customer has the option of booking the difference to the next higher round sum to a separate sub-account. Otherwise, the “Smart” account is given various features of the previous payment accounts. These include a physical Mastercard debit, up to ten sub-accounts, and so-called “Shared Spaces” for the payment of joint projects across several users. What is missing in comparison to the previous “You” and “Metal” accounts are, among other things, various insurance benefits included in the account price.
Even though the free standard account is retained, the introduction of the “Smart” account gives the impression that N26 wants to leave the free approach behind bit by bit. In recent years, the bank has seen impressive customer growth, not only in Germany but also in France and Austria, for example. However, it is unclear how many of the official five million customers the Berliners actually earn money with or at least generate income with.
Finanz-Szene.de had estimated the number of lucrative customer relationships at around one and a half million about a year ago
This is in line with what was reported in the 2018 financial statements of the N26 Group, which were published shortly afterwards – namely that the number of customers at that time was only over “over one million” on a certified basis. It is not 100% clear how the conflicting figures can be explained. One thing is certain, however: Over the past few years, N26 has attracted many customers with whom it is not really possible to do business. The $5.8 (€4.90) account could be an attempt to concentrate more on qualitative growth in the future – even if N26 General Manager Georg Hauer emphasized: “We generate contribution margins in Germany with all existing account models, even with the free account.”
The fact that the focus of German retail banks is generally shifting away from pure customer acquisition and more towards profitability and calculable income flows can hardly be overlooked, however.
ING has apparently renounced new customer growth, introduced fees for inactive customers and focuses on encouraging customers to do as many profitable business as possible. Commerzbank, too, which is now finally driving a “hybrid model” of branch and online accounts with the integration of Comdirect, no longer wants new customers at any price.
Savings banks and genobanks are also booming models that focus on the profitability of the customer relationship and in which the account is only free for those customers who generate income elsewhere
However, since it is difficult to convert a customer once won over for free services into a paid model, N26 apparently prefers to lure customers willing to switch to a paid model from the start. “It is obvious that we will roll out some new features first over our premium models,” said N26. In plain language: With the currently and in the future free account, the end is probably already reached in terms of the scope of services.
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First published in finanz-szene.de, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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