N26 SWOT & PESTLE Analysis

Strength

1. Rapid increase in customer base: N26 is a Berlin based neo-bank setup in 2013. Neo-banks are 100% digital banks without any physical branches. N26 acquired banking license in 2016 from BaFin. N26 operates in Europe and United States. N26 offers both, basic and premium accounts. N26 has become Europe’s most valued fintech with over 5 million users. Smartphone and internet has made it feasible for users to have access to their bank accounts 24*7. It has a very strong consumer base in Germany, France and Austria. N26 recorded 1 million users as soon as it launched in Switzerland. N26 is eyeing launch in Brazil this year. Since it roll out in the United States,the German neo-bank’s consumer base growth has gained great momentum and is pending 100,000 application for verification. It is also running advertisements and campaigns to reach every probable customer. N26 is eyeing to become a global brand by adding 30 to 70 million customers.

2. Increasing partnerships with leading industries across domains: N26 has been expanding its market reach and user base through establishing strategic partnerships. N26 has been collaborating with leading brands across different domains. N26 recently partnered with Lime, a transportation company which offers electric scooters on the go. User’s also get discounts hiring these scooters while paying through N26. Similarly, N26 also partnered with Booking.com to offer easy payments and make travel for its user’s smarter. N26 and Booking.com offer their existing customers with 20% discount on accommodations and 10% cashback if transaction or payments are being made through N26. This gives flexibility to the customers of N26 while they travel. N26 has over 15 such partnerships with different brands.

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Weakness

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Opportunity

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Threats

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Political

1. Brexit causing N26 to exit UK operations: N26 had its operations extensively running throughout Europe. Britain-wide referendum conducted in 2016 under the leadership of Theresa May voted 52% in favor of withdrawal from European Union. United Kingdom had officially announced exit from European Union on 31st January 2020 with the completion of the process. Following this N26 announced to freeze its operations in Britain. N26 has European banking license from European Central Bank which was not valid for UK after Brexit. N26 has retained its workforce from UK and continue as a part of N26 while it grows internationally. All customers outside Britain will remain unaffected.

2. Regulatory challenges in the US market: U.S. banking is regarded as one of the most competitive markets gloablly. Rigid competition is witnessed by the U.S. markets as traditional banks have adapted to the smartphone era better than many of their European cousins. In the U.S., a neo-bank must rely on a partner bank for federal insurance. This itself raises questions on their trust and reliability factor. Additionally, partner banks eat into the profit margins of neo-banks; The neobank has to pay the partner for their services and reliance. All these challenges — increased costs, a more competitive environment and a tougher regulatory ecosystem — hobble up growth for challenger banks such as N26 in the U.S. market.

Economic

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Social

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Technological

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Legal

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Environmental

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