Fintech/News/ N26’s losses widen after compliance spending push The German challenger bank has continued hiring this year, and ramped up its spending on regulatory compliance and fraud prevention By Amy O'Brien 11 October 2022 \Fintech Is it finally European insurtech’s moment in the sun? By Amy O'Brien 14 February 2023 Fintech/News/ N26’s losses widen after compliance spending push The German challenger bank has continued hiring this year, and ramped up its spending on regulatory compliance and fraud prevention By Amy O'Brien 11 October 2022 N26’s net losses rose 14.4% to €172.4m last year, the German neobank reported as it focused on addressing its compliance headaches. The fintech attributed its increased losses to a 31% increase in spending on governance, compliance and online fraud prevention frameworks, as well as continued hiring — at a time when many of its competitors have frozen hiring or are making layoffs. The company’s fiscal year runs through December 31. “2021 saw us solidify our position as a leader in Europe’s digital banking market,” CEO and cofounder Valentin Stalf said in a statement. “We made further investments in our product, in our team, and in the scalability of our platform.” The figures come after Stalf admitted to Sifted earlier this year that the company should have invested more in compliance earlier after years of headaches which most recently include a fine in Germany and a new client ban in Italy. The neobank’s hiring push comes amid struggles with employee retention — which Stalf also told Sifted that N26 had taken steps to improve. The neobank also reported a 70% surge in net revenue to €120.3m driven by stronger customer engagement, a growing user base and higher interest rates. Users and transactions both growing N26’s user base grew by over 1m in the year to 8m customers — of which 3.7m were what it called “revenue-relevant” in a statement accompanying the results. Transaction volumes increased by around 60% to over €80bn during the year, which Stalf attributed to the bank’s growing user engagement. “On average, customers log in to their N26 app three times a week, making us the mobile bank with the most active customer base in Europe,” Stalf said in a statement accompanying the results. The figures also reflect a period when the neobank made a high-profile exit from the US in November 2021 — that failed venture contributed €28.8m to its losses for the year. This US departure was N26’s second short-lived attempt at expansion outside of the EU, following its exit from the UK in 2020. In an interview with Sifted earlier this year, Stalf said N26 plans to go deeper into Europe by fending off its neobank competitors and launching new products, before a second attempt at global expansion once the bank has “reached 15-20% market share in Europe”, up from single digits at the moment. N26’s existing core European markets are Germany, France, Italy, Spain and Austria. Amy O’Brien is Sifted’s fintech reporter. She authors Sifted’s fintech newsletter and tweets from @Amy_EOBrien. Related Articles Stripe acquisition leads European fintech’s gold rush into India By Tom Matsuda Click here to read more Who will the Covid unicorns be? By Marie Mawad in Paris Click here to read more Why Zilch is remaining quietly confident By Amy O'Brien Click here to read more This is why VCs love SaaS Sponsored by Oracle NetSuite Click here to read more Most Read 1 \Healthtech Is Daniel Ek’s new body scanner worth the hype? Sifted tried it out 2 \Venture Capital VC diversity needs to change — and white men need to take responsibility 3 \Venture Capital New €3.75bn European Investment Fund pot to back late-stage VCs 4 \Sustainability Counteract closes £15m fund for carbon removal solutions 5 \Mobility Was the $5bn that VCs plugged into escooters worth it?