N26, a prominent German online bank, announced on Wednesday its plans to introduce stock and exchange-traded funds (ETFs) trading for its customers in Austria and Germany. This move is a strategic effort by N26 to achieve profitability. Initially, the bank will offer ETF trading to select Austrian customers starting January 17. It plans to expand its offerings to include over a thousand stocks in the coming months for both German and Austrian clients.
German Neobank N26 Starts Offering Stock Trading in Austria
The decision follows a surge in retail trading fueled by the COVID-19 pandemic, which led various mobile banking platforms, including the UK’s Revolut, to incorporate stock and cryptocurrency trading features. N26 had previously launched crypto trading for some of its users towards the end of 2022.
The move comes after the German financial watchdog BaFin penalised N26 in 2021 for lapses in money-laundering controls and placed a cap on its new customer intake. This cap was increased in October from 50,000 to 60,000 new customers per month, as reported by the Financial Times.
Valentin Stalf, the CEO at N26, commented: “Following the launch of N26 Instant Savings and N26 Crypto, N26 Stocks and ETFs will give our customers the ability to manage all their finances within the N26 app. Our customers can spend, save and invest within one app at extremely competitive rates, with no hidden fees and an exceptional user experience.”
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Stalf also mentioned that regulatory scrutiny has intensified in the wake of the Wirecard scandal, referring to the German payments firm that collapsed in 2020. He further stated that N26 is projected to experience marginally negative profits in 2024 but is targeting profitability on a monthly basis in the latter half of the year.
According to Stalf, while growth was a primary focus two years ago, the current emphasis is on profitability and the business model’s sustainability. After securing $900 million at a valuation of $9 billion in 2021, N26 does not foresee the need for additional fundraising in the near future, with Stalf affirming that the bank is “well-financed for the next couple of years.”
Stalf also hinted at a potential initial public offering (IPO), which he believes could realistically occur within the next three to five years.
