N26, a very successful digital-only bank, has amassed 3.5 million customers in Europe with a simple, elegant banking app and no fees. And now they have begun an initial launch in the U.S, with a scaled down banking product. After initially pursuing a bank charter, they found the path of least resistance to partner with federally chartered Axos Bank, (formerly Bank of Internet USA) that has just under $10 billion in assets.
N26 is starting small with a fee-free checking account and debit card. TechCrunch describes the account capabilities as follows:
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, ATM withdrawals or payments abroad.
Their plans are to continue to build out their product set, capabilities and customer reach:
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
Just like Chime, N26 will also try to let you get paid up to 2 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.
It will be interesting to watch if N26 can channel their success abroad to the U.S. The features of the N26 solution mentioned are easily found through traditional banks, through the digital subsidiaries of traditional banks, from Fintechs and prepaid program managers, lenders and brokerage firms. Many of these providers have distinguished themselves through high savings rates, a tactic N26 doesn’t use, at least at this phase.
Mercator Advisory Group has taken a look at the increasingly crowded field of digital-only banking in the U.S. in a report; Digital Consumer Banks in the U.S.: Your Money or Your Wallet
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group