Echarri (N26): “That there are so many mergers between banks is a huge opportunity for us”

This year the neobank will launch a marketplace with investment products, insurance and trading that will allow the purchase of crypto assets.

Marta Echarri, general director of N26.

The main difference between neobanks, such as N26, and the more traditional entities it is clear to Marta Echarri, General Director of the entity in Spain and Portugal. “They are walking like a dinosaur with very heavy steps. We wear shorts for life, very light ”, he explains during an interview with Invertia.

The financial sector is currently going through a complicated path full of obstacles. To the low profitability, undermined by the immutable interest rates, is added the economic deterioration of the pandemic, which will bring to the system a sharp increase in non-performing loans.

In this context, N26 is very optimistic about its future, which it faces with a different model from that of traditional banking. “The fact that there are so many mergers between the major banks is a huge opportunity for us.”, says Echarri, who defends a subscription banking model in which it is the client who chooses how close they want their relationship with the bank to be, not the other way around.

The client is very tired of the bank imposing on him what he needs to work with him and tell him: I’m going to give you a free account, but you have to bring me your mortgage, your pension plan, and your payroll. And if you don’t bring me these three things, then I’ll start charging you“, Explains Echarri, who joined the bank last January from Lombard Odier.

The CEO of N26 likens the provision of financial services to the accommodation offer in the hotel industry. “You can go to a hotel room that is very cheap, but they have the minimum and necessary, to the Holiday Inn on duty, or you can go to the Four Seasons, where you have a man take your suitcase, a spectacular bathrobe and you They let you choose the pillows. This comes at a price, but you are the one who chooses“, exemplified.

Banking on demand

In this framework of the subscription model, N26 continues to bet on a free account “Really: without conditions and without ties” (Standard), which is the one that most of its customers prefer, but it also offers three other tiers: Smart, which costs 4.9 euros per month; You, for 9.9 euros, the Metal, for which 16.9 euros are paid per month, “like two drinks.”

The offer is similar for autonomous clients, which are framed in the category Business but they can opt for the same levels of bonding as individuals. It is precisely this segment that is experiencing the most growth at the moment. “The cards Business are the ones that are now flying. This semester the focus on self-employed cards has been brutal and we are seeing it in the numbers“, He points out.

A model that clashes with that offered by the more traditional banks, which, in search of greater profitability, they tend more and more to demand a greater bonding to clients in exchange for not paying commissions on their own.

How can these differences coexist in the same sector? “The cost infrastructure that our traditional competitors have is too heavy. The fact that they have the branches they have and their management, the management of the technological legacy … They walk like a dinosaur with very heavy steps“, Echarri points out. N26, however, has no branches or plans to have them, which makes it walk “very light”.

The figures, Echarri defends, support his theory. The entity has increased its number of clients by 70% between 2020 and so far in 2021. “Americans consider us a high growth company, a company with very high growth, they even talk about hypergrowth “, he explains to this newspaper.

Your company’s cost structure is much simpler. “Our expenses are the technological engine of our company and, of course, the employees. For everything else we go in shorts for life, we are very light ”, adds the director of the bank, which has a banking license in Germany and is covered by your deposit guarantee fund, although as a branch of permanent establishment in Spain it is also under the supervisory umbrella of the Bank of Spain.

Marketplace Y cryptos

For the future, N26 plans go through launching a marketplace in which savings products, insurance, trading and, in general, sale and purchase of financial assets, among which are also crypto assets. “Strategically it is totally on our roadmap”, Echarri explains about the latter.

The entity is currently working on seal alliances with third parties both in Europe and in each of the markets in which it is present to launch this marketplace, which will allow the purchase of products in the N26 application itself.

“With this, what we are doing is avoiding the client an additional step, because through our own verification they will already have access to our partner“, Explains the general director of N26, who stands out as one of its strengths the technological development:” From the technological point of view, the advances with which we operate the truth is that they are difficult to beat for our more traditional competitors “.

Image from the N26 mobile app.

Image from the N26 mobile app.

In the plans for this near future, for the moment, the granting of credit is not, another circumstance that differentiates N26 from the more traditional banks. “When you lend, you have to make sure that you get your money back. This is very obvious, but it is because if they do not return it you have to provision funds and at the end of the day it is a de facto loss to your profit and loss account. Ultimately, creating a credit score per customer requires a number of business and regulatory requirements that we have decided to leave for an eventual second stageEcharri explains.

Access to cash

The bank has recently launched CASH26, a functionality that allows its customers to enter and withdraw cash in stores of the Bon Preu Group and CSQ through an agreement with Viafintech, with which N26 has an exclusive contract.

In addition, the bank’s clients have between three and eight free cash withdrawals per month at ATMs throughout the euro zone, depending on the type of account they have contracted, although Echarri acknowledges that cash is being used less and less.

“More and more people prefer to stop using cash, to stop touching bills. Not only cosmetically, but from a health point of view it is much worse than literally paying with your phone ”, acknowledges Echarri. The pandemic has accelerated these dynamics even in the case of its customers, who were previously “very familiar with payments contactless (no contact)”.

As an Echarri account, the clients of your bank, with a majority profile between 30 and 40 years old, do not need to carry anything other than their mobile and keys when they go for a run, for example, because they can make payments directly from their device or withdraw money through the mobile application. One more sample of that “light” walk that guides the entity, a neobank that, compared to the heavy backpacks of other competitors, travels its way in the financial sector in “shorts”.