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N26, a Berlin-based challenger bank, is pulling up stakes from the U.K. after that country finalized plans to withdraw from the European Union under Brexit.
N26 said it will no longer be able to operate in the U.K. under its European banking license and the digital bank will close all British accounts by April 15th.
"We made this decision after careful analysis of our position in the U.K. market after the U.K. parliament signed the withdrawal agreement and decided to leave the EU on 31 January," Sarah Webster, a spokesperson for N26 told Mobile Payments Today, via email. "As a European bank with a European banking license, we would need to undertake complex and costly regulatory measures and product updates in order to continue operating in the U.K., as a separate license for the U.K. requires significant operational processes and costs."
N26 officials said the move will not impact any of its other markets, including the U.S., where it launched in 2019 and now has more than 250,000 customers, through a partnership with Axos Bank, which provides FDIC insurance for accounts up to $250,000. N26 has a total of 5 million customers worldwide, with nearly all of that business in the European Union.
All N26 accounts in the U.K. will continue to operate normally until April 15th. Customers in that market can transfer their funds to other banks.
Nick Maynard, lead analyst at Juniper Research, told Mobile Payments Today that other European digital banks have pulled out of the U.K. market due to Brexit-related uncertainty, most notably Fidor Bank in July 2019.
However, Maynard was puzzled that N26 didn’t anticipate the potential disruption before it committed to the market.
"What is more surprising to me is that N26 only launched in the UK after the referendum result, so they must have been expecting some disruption," he said via email. "In this case, its likely that N26 has judged that it can better serve its growth targets by focusing outside of the U.K., meaning that it will not have to incur the extra costs of obtaining a U.K. banking license."
Cover image: N26
Companies: N26 Inc.