The move comes in the context of n26's ongoing efforts to achieve profitability. Monitored by German financial regulators, N26 will initially allow Austrian customers to trade ETFs starting 17 January 2024, with plans to extend the offering to include 'over a thousand stocks' for customers in Germany and Austria in the coming months according to Reuters.
The development follows a trend in the financial industry, where various mobile banking apps, including the UK's Revolut, have incorporated features allowing customers to trade stocks and cryptocurrencies. N26 had previously introduced cryptocurrency trading for select customers in late 2022.
Representatives from N26 cited by Reuters noted that a majority of the bank's customers had completed the necessary verification and eligibility checks to participate in stock trading. The German financial regulator BaFin had fined N26 in 2021 for failures in money-laundering controls and had imposed customer acquisition limits. In October 2023, the limit was increased to 60,000 new customers per month, up from the previous 50,000.
N26 officials acknowledged increased regulatory scrutiny following the Wirecard scandal in 2020, emphasising that regulators have heightened their oversight. They mentioned that N26 anticipates 'slightly negative' profits in 2024 but aims for monthly profitability in the latter half of the year. In essence, the bank is undergoing a shift in focus from growth to the sustainability and profitability of the business model.
Having raised USD 900 million at a USD 9 billion valuation in 2021, N26 does not have plans for additional fundraising and asserts being 'well-financed for the next couple of years according to company representatives cited by Reuters. As for a potential initial public offering (IPO), the same sources revealed that this could occur within the next three to five years.
In November 2023, N26 revealed its decision to discontinue its test phase in Brazil, as well as closing its operations in the market. Following this announcement, N26 proceeded to close all accounts in the region of Brazil within the next two months.
At the time, the official press release highlighted that the decision underscored the financial institution’s strategy to focus on its core European markets, as it aimed to further strengthen its position as a European digital bank.
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