N26 and Monzo gear up to launch in US

FinTech challengers N26 and Monzo are gearing up to launch their services in the US in the coming months, as European challenger banks accelerate their global expansion strategies.

Berlin-based digital bank N26, which first launched in Germany in 2015, announced that it had now reached the milestone of 3.5 million customers across 24 markets, and confirmed that it would be ready to launch its app-based banking services in the US “in the coming weeks.”

The firm raised $300m in February, making it the highest valued European FinTech at $2.7 billion. It has since come under scrutiny from German banking regulator BaFin over its anti-money laundering control processes.

N26 had initially hoped to be ready to launch in the US in mid-2018, but the process has been held up.

In November last year Alexander Weber, head of international markets, told FSTech the move would be subject to striking an agreement with a more established US partner to operate as a bank before obtaining access to a federal banking licence.

Announcing that N26 was now ready to operate in the US, Maximilian Tayentha, N26 co-founder, said: “Our US launch marks the next logical step for N26 to become a global bank, as many more people around the world are looking for a simple and hassle-free banking experience.”

A statement for the bank said its continued growth in Europe indicated that “customer preferences are shifting and that the retail banking industry is undergoing a substantial transformation.”

Rival challenger bank Monzo also rushed out an announcement of its US ambitions yesterday afternoon, explaining that they have opened a waiting list for registrations in the US and would be holding face-to-face events with in major US cities to build a community as the company tailors the app for US customers.

Monzo said it expects to open the first US accounts with Mastercard debit card and mobile app in summer 2019. The company launched its mobile only banking services in London in 2015 and has since grown its UK customer base to 2 million.

In April it was reported that a US backer was set to participate in a £100m fundraising round, which would see its valuation double to £2 billion.

In a blog posted to Monzo’s website, Ofelia Botella marketing project manager, wrote: “Our mission is to make money work for everyone, and that means we can’t just stay in the UK forever. Our next stop is the USA, and for the past few months we’ve been exploring how we can launch here, and what a US version of Monzo would look like.”

She added: “We know that American customers’ needs won’t be exactly the same as in the UK, so we’re starting simple. We want people to use Monzo, tell us what works and what doesn’t, and collaborate with us to make Monzo the ideal bank account for the US.”

Also joining the flurry of announcements yesterday was money management app Emma, which said its services have gone live in the US and Canada after it partnered with Plaid, an American account aggregator platform.

Edoardo Moreni, chief executive and co-founder of Emma said the partnership would give 350 million people access to Emma. The FinTech launched in January in 2018 and offers budgeting and savings services.

“Emma was built to empower millions of individuals to live a better and more fulfilling financial life - the UK was the best place to start and iterate in order to build the first finance app in the world,” said Moreni.

“However, we are now ready to take the company a step further in order to achieve our mission faster. That’s why we are launching Emma in the US and Canada.”

Commenting on the moves, Richard Lumb, group chief executive of financial services at Accenture said: “A growing number of British born fintechs have plans to move stateside where US fintech investment reached over $16B last year. The scale of opportunity in the US’s $7 trillion financial services sector is huge for fintechs.

"And with the US regional bank sector vulnerable to disruption and in need of new innovations, banks are partnering with fintechs to roll out new services. For UK fintechs looking to fly the nest, one major contrast will be the complexity of federal- and state-level laws, compared to the UK’s fintech-friendly regulatory environment.”

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