FinTech: N26’s Shock Announcement of its Departure From the U.K.

February 13, 2020 | FinTech, Latest News, News

Challenger bank N26 asks UK customers to shut accounts by April 15.

N26 has announced its departure from the UK on account of Brexit in a blog post.

“With the UK now having left the European Union, we will in due course be unable to operate in the UK with our European banking license,” the Berlin-based N26 said. “As a result, we will be leaving the UK and closing all accounts in the coming months.”

In a press release, N26 blamed the “timings and framework outlined in the Withdrawal Agreement,” but said it fully respected the decision that had been taken.

Customers in the UK

The challenger digital bank had about 200,000 customers in the UK. All accounts in the country are now required to be closed by April 15. Until then, accounts will work as normal, including all card payments and direct debits.

However, customers with money in their N26 accounts must now transfer their deposits to an alternative bank account. Any money that customers fail to remove from the accounts will be placed in a holding account by default.

Shock announcement by N26 – is Brexit the real reason?

BBC pointed out that N26 had embarked on a solid marketing push after its launch in the UK. Further, it started to offer current accounts only after the EU referendum. The BBC article drew attention to shadow chancellor John McDonnell fears of an exodus from the City if the government did not quickly clinch a deal with the EU on financial services. (BBC NEWS)

The BBC said challenger banks were finding it tough to survive in the UK’s current account sector because most Brits did not use their offerings as their mainline banking account.

CrowdFundInsider hinted that Brexit may not be the real reason for N26 leaving the UK, one of the largest European markets. It suggested intense competition from rival challenger banks such as Revolut and Monzo may be the more plausible reason. It also speculated N26 was finding it expensive to service its relatively smaller customer base.

N26 -Inexplicable volte-face

Moreover, altfi pointed out that as recently as October 2019, with the elections looming large in the UK, N26 said in a blog post that it would remain in the UK. The post has since been deleted.

In a cached copy of the blog unearthed by altfi, N26 said:

“While these are unsettling times, they will not distract us from our number one priority: delivering a Mobile Bank the world (and our UK customers!) love to use.”

Clearly, there may be other, more compelling reasons than Brexit for N26 to withdraw from the UK.

Related Story: Challenger bank Revolut launches 3-D secure payments for online transactions                                                  

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