After a cat and mouse game between N26 and the German BaFin it looks like they’re taking their penalizing of malpractice to a whole new level. While the German challenger seems to be enjoying the high waves of the funding race with rivals like Revolut and Monzo, the same cannot be said about its relationship with the regulators. If you are remotely connected to the payments world, you probably heard about the hefty fine they received over their failing anti money laundering strategy.
After being appointed a watchdog by the regulators, N26 has now been given a cap on their customer acquisition. In other words, the bank that has been onboarding 170,000 customers every month can now only accept 50 to 70 thousand users monthly until they address issues raised by BaFin.
Banks (both incumbents and challengers) have been notorious for questionable compliance with AML.
Just to freshen up your memory, ING was fined €3 Million for failures in anti-money laundering regulation earlier this year, only to be followed by ABN AMRO agreeing to pay a whopping €480m for similar violations. Not to mention that Monzo is also under investigation by the British regulator
It seems, however, that these hefty fines weren’t helping with the issue, as banks continue to violate AML rules despite hefty fines. Therefore, the BaFin is putting a limit on customer acquisition this time, which we also suspect to be THE business model of N26.
Looking at this extreme measure, we can't help but wonder about their missing out of potential revenue this could cause. So we believe that the next strategy for N26 to maintain their revenue is to maximize the value of their existing customers. How do you think they could compensate for the lost revenue on customer acquisition?
Finally, it is evident that the German regulators are keeping an extra sharp eye on financial institutions after the recent Wirecard scandal.
Do you think that the BaFin is doing the right thing? Or did they take it a notch too far?
As competition in the payments ecosystem is riling up between traditional and challenger banks, reshaping core systems and technologies of traditional banking is long overdue. When talking about future-proofing banks and financial services, the term Banking-as-a-service is starting to come up a lot. But what is banking as a service all about and how is it reshaping the industry?
Apple’s push to secure a spot in the payments ecosystem is still going strong. Or at least that’s the plan — executing on it may be … well, not that simple. This is because Apple has been making moves to build a network of merchants, among the most critical components of the payment value chain … with functionalities that are already out there in the market.
If you’ve even moderately kept an eye on any payments related news source, there’s no way you have not been bombarded with the Buy Now Pay Later craze in 2021. Almost all the widely known payment players in the field who could partake in the BNPL craze… actually did. We are quite sure that you have heard about the likes of; Klarna, Affirm, and Afterpay, but industry Giants such as Mastercard, Paypal, Visa, Square, Monzo, Revolut, Amazon, and even Walmart, are all offering BNPL options at checkout or are partnering with BNPL companies to offer this service to their customers. Even mighty Apple is climbing aboard.