How good is N26 really? How much revenue does the Berlin Challenger Bank make per customer, and what does the acquisition cost in return? To make it short, on none of these questions, which would really have to interest every German banker burning, there was so far an answer.
Now, however, the informal research pool from Finanz-Szene.de and Gründerszene has come across the first full-scale corporate report from N26. And in that is really (almost) everything in it, what you want to know, but so far did not know. We have to make a restriction. The numbers are from 2017, so they are already one year old. That is not really dramatic. After all, it is the numbers on the basis of which large investors such as Tencent’s Allianz pumped EUR 130 million into N26 last March.
N26 actually already generates income, but not so insanely high
In total, N26 generated revenues of € 11.24 million in 2017, with the largest part being commissioned (€ 10.02 million). This seems puny at first, but compared to 2016, if you just capitulate to the commission income, corresponds to an increase of about 2000 percent. With this you can get income per customer somewhere between 20 and 25 euros. In our view, that’s not all that bad, even if some well-established banks alone make clear about the account fees 120 Euro per year for normal customers.
Cashburn continues to be digestible
Measured by the brutal growth of the cashburn remained in the frame. The bottom line was a net loss of € 32 million plus € 24 million in losses, all of which had accumulated in the founding years. That sounds very reasonable, considering that N26 has recently collected nearly 400 million euros from investors within ten months.
The customer acquisition costs are brutally low
According to our calculations, N26 won about 400,000 new customers in the year before last. According to the annual report, the marketing costs amounted to 7.99 million million – down on the individual customer 20 euros. Of such acquisition costs established banks (which sometimes wave even with 100 euros cash premiums) only dream.
The verification of a customer costs 4.50 euros
What is the most important KPI according to N26 Group Report? As for the onboarding costs, the cost of verification is even quantified exactly 1.93 Millions of euros were raised for this purpose. With reference to our 400,000 new customers, this means 4.83 euros per customer. But since one does not have to reckon with the new customers, not with the net but with the gross number, we just round it out to 4,50 Euro.
The average customer entrusts N26 just under 600 euros
As at 31 December 2017, N26 managed client deposits due on demand amounting to € 411.8 million. In terms of an estimated 700,000 customers, that was an average of exactly 588 euros. By comparison, the British rival Monzo, it was just under 150 pounds by February 2018.
Nevertheless, N26 is far from a retail bank in the broad sense of the word
The classic business of a retail bank, that is, with loans, is operated by N26 so far only very rudimentary. So summed up the loans to end customers by the end of 2017, just on a ridiculous 9.57 million euros not even 14 euros per customer. Consequently, the asset side consisted primarily of Treasury.
The income comes from payments and card business
The most important source of income is the payment business. The whole thing is not quantified, but at one point in the group report it says: “The main driver for the net commission income was the provision of payment services and the card business.”
Also published on Medium.