15 March 2019
National borders counteract scalability; it’s all about the individual
Although financial organizations, such as the ECB, stimulate European collaborations on pan-European payment initiatives, no pan-European solution has been brought to the market yet. The frequently used rationale behind this, is that Europe is too fragmented for one pan-European solution: it counts many different cultures with even more different payment preferences. Internet bank N26 tackles this reasoning with the development of a pan-European online banking app, that is now operational amongst more than 2.5 million users across 24 countries. In this blog Daniel Calvert, Head of Partnerships at N26, explains how they managed to scale up their innovative business to pan-European level and beyond.
No traditional bank
To an outsider, N26 seems to be a meet-in-the-middle organization. It has features of a bank, but at the same time it’s an all-digital entity. Does that make N26 a bank or a tech-company at its core? Calvert: "We are definitely a bank. But traditional? No, that we’re not." He explains: "We still offer all services that any bank should offer. Easy money transfers and safekeeping, trust and great service. We just integrated the user-friendliness that’s expected of a tech-company in our banking app."
Individuality over nationality
The key question is what makes N26’s central approach to banking more customer-friendly than acculturated banks which adjust to national economies and trends. "That’s exactly the spirit that throws businesses off track", explains Calvert. He sees that when businesses look to expand, they aim to adapt their products culturally and in doing so they tend to look at countries. But, when N26 considers its customers and their needs and requirements, it focuses a lot more on the individual.
Calvert argues that it’s not useful to primarily define customers based on their nationality. "Nationality doesn’t mean equality", he states. "People can differ tremendously from one another within national borders. There are nearly 47 million Spaniards, nearly 83 million Germans and more than 325 million Americans", says Calvert. "The reality is that none of these people are equal. The only thing we do know is that people in general are becoming more and more digital, so that is a need that we can accommodate for all of them."
Adapting to the individual
According to Calvert N26 doesn’t let itself get distracted by national borders. He carries on: "It’s a lot more accurate to focus on customers’ characteristics, their personal lifecycle and financial situation. By focusing on and, more importantly, tailoring to those aspects, we’ve managed to transcend borders. We are building a borderless bank."
How can a bank provide such a universal solution, and yet tailor to individual needs? The answer is simplicity, according to Calvert. "Simplicity in the sense that the basis of our bank is easy to use for a very large number of people. The customer’s individual preferences and experiences are reflected in the personal use of the bank." Calvert explains further with an example called N26 Spaces, with which customers can build subaccounts in their banking app, dedicated for personal goals. Calvert: "I love to travel, so I have a holiday space to save up money for our upcoming trips. My girlfriend is a fanatic runner, so she puts money aside for marathons and new shoes in her subaccount for running. These subaccounts help us reflect on our personal money management."
Can’t escape cultural differences
An overhauling approach that adapts to each individual does not mean that N26 ignores cultural differences altogether. When N26 was transcending the borders of its originating country Germany, it did see clear differences in terms of how national markets were operating.
Calvert paints a picture: "When we launched our free bank in Germany, this was a big deal because most of the traditional German banks charge customers a fee for their bank accounts. In the UK, this was not the case; the UK is very different in terms of the competitive environment. It is home to some of the most developed banks in the world, which all provide a free account, so our marketing strategy had to be adapted to that specific market. And looking at the US, we see a very fragmented banking environment as well as a strongly developed high-tech environment. The US have some amazing examples of revolutionary products for digital natives, such as Netflix and Airbnb. We didn’t see any overlap between the banking industry and this high-tech industry. That’s how we market ourselves over there. In short: we don’t bridge cultural differences by adapting our product to every market, but by positioning it in the right way within each market."
Simplicity is key
The most important thing in becoming a pan-European industry leader, according to Calvert, is keeping it simple. He says: "In order to be pan-European, or global for that matter, you have to seek that simplicity I mentioned before. It is the basis to transcending borders effectively and quickly. A simple product that is trustworthy and incredibly user-friendly is what everybody wants, a strong marketing strategy will do the rest. It’s the start of the future."