Revenue
$328.00M
2023
Valuation
$9.00B
2023
Growth Rate (y/y)
27%
2023
Funding
$1.70B
2023
Revenue
Access our full N26 financial model here.
Sacra estimates that N26 generated $328M of revenue in 2023, up 27% from $258M in 2022.
N26 monetizes by taking a cut of every customer transaction in the form of interchange—accounting for 30-40% of income—as well as offering premium subscription accounts and value-add services like lending.
Product
Like other early European neobanks, N26 launched in 2014 to bring a more consumer-friendly banking experience to market, with the ability to sign up for an account in five minutes instead of waiting days and making a physical visit to a bank.
Where N26 most clearly differentiated from other online bank competitors was in their focus on mobile app user experience—from instantly reflecting transactions in-app(1), to Mint-like spending overviews(2), to intuitive controls for functions like disabling ATM withdrawals or enabling international spending(3).
Because German banking licenses enable neobanks to operate in other markets inside the EU, N26 was able to launch in Germany, Austria and Switzerland from day 1 and quickly expand into other European countries.
Competition
The #1 neobank across each European country
Across Europe, it’s becoming increasingly clear that while N26 has found powerful footholds in France and Germany, the neobank is #2 behind Revolut in most markets.
That’s not necessarily to say that European neobanking is a winner-take-all market. The market in the United States shows—with companies like Chime, Square, PayPal, SoFi and Robinhood all achieving $10B+ outcomes—that even #2 has the potential to be a large outcome.
For now, N26 has existing plans to expand further in Eastern and Central Europe, where existing mobile banking options are weaker and European competitors like Revolut are not as well established. They are also planning a move to launch in South America.
Prior expansions to the United States and United Kingdom were less successful, and N26 pulled out of both of those markets in 2021.
TAM expansion
Comparing ARPU per monthly active user across various financial services around the world illustrates the upside case for both Revolut and N26. Russian neobank (and the world’s largest digital bank by number of customers) Tinkoff driving $278 per user and JPM Chase driving $2,576 per user— 78x what N26 is able to generate from each one of its users today.
While their ARPU is low relative to these larger financial services companies today, the flip side is that N26 potentially has more room to grow if they can continue to layer on new features like crypto, retail trading, and as they continue to make financial services more efficient and user-friendly and win market share across Europe and the world—from existing bank giants like HSBC, Barclays, Deutsche Bank and Santander as well as from other neobanking startups.
Risks
The COVID-19 pandemic was not a powerful tailwind for N26 as it was for some software and fintech companies (see below). While online banking grew with lockdowns and physical bank closures, key neobank use cases like remittances and international spending (due to travel restrictions) slowed down, while use cases like retail trading and lending (where N26 has not built out its own capabilities) accelerated. Incumbent banks have moved to compete against digital-first neobanks as well, with various app launches from Marcus (Goldman Sachs) and Mettle (Natwest) to Fyrst (Deutsche Bank) and Openbank (Santander). These products come with strong pre-built customer trust, larger warchests of money to spend on further customer acquisition, and less exposure to challenges in the fundraising environment.
User-friendly design and low pricing—as well as things like overdraft protection—used to be sufficient for neobanks to differentiate from incumbent banks, but these value propositions are quickly being emulated by new startup neobanks that differentiate by targeting specific customer groups and use cases. Providing value-add services for specific groups of customers may be critical for neobanks to win in an increasingly crowded market.
App metrics
Fundraising
Exit scenarios
IRR calculator for illustrative purposes.
Comps
IPOs
Disclaimers
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