Neobank N26 finally hits the Brazilian market, but for everyone only in 2022

November 4, 2021
Personal Finance Journalist
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Digibee
Since putting its debut in Brazil on hold, the German digital bank N26 has seen the market change a lot, with the advance of different players, in an accelerated movement by the pandemic, after all, the Brazilian searched for more digital solutions.

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To take just a few examples… Nubank has consolidated its leadership and, with nearly 50 million customers, is about to make an IPO at NYSE. In just two years, C6 Bank was born and gained muscle to the point of being among the largest neobanks in the country, with more than 10 million customers.

Inter, with more than 14 million account holders, is preparing their bags to list their shares on Nasdaq. Next, created within Bradesco, took on a life of its own and now has more than 8 million customers. BTG Pactual took out of the hat BTG+, its digital retail bank.

It is, in fact, a more competitive scenario. Not so the N26 abandoned the plans, even though they say it missed the best moment of a boiling market to launch the Brazilian operation.

Starting this Thursday (4), fintech will start selecting people from the waiting list, currently with almost 200 thousand subscribers, to test and co-create the new product. Right now, a small group of family and friends — something like 200 people — are trying out the solutions.

“We're in full force to launch the launch by the first half of next year, with a local strategy, including all the features created from scratch, with local core banking, exactly because it was clear that we would like to solve a new problem”, explains Eduardo Del Guerra Prota, general manager Brazil of the N26.

The problem Eduardo refers to is the Brazilian's difficulty in dealing with money. For the executive, despite the experience with financial services having improved in recent years with the creation of digital banks, the experience with money needed to be improved. “We understand that focusing on financial health is the next horizon,” he points out.

It is with this strategy that the N26 intends to differentiate itself in the Brazilian market, clearly a country with many opportunities and inefficiencies. The intention is to lead what Eduardo classifies as the “second generation of fintechs”. The first generation, he says, gave a lot of focus to credit and payments, and brought services with lower costs for the consumer.

“What we want to do more with the second generation of customers is a more SaaS model. As it generates more value, it pays more”, says Eduardo. This operating system with a focus on financial health will, of course, have basic banking services and products, such as account, credit card and payments via Pix.

To put the digital bank on its feet in Brazil, at the end of last year, the N26 received the SCD (Direct Credit Society) license, which will allow it to grant credit with its own resources. Since then, fintech has resumed efforts to take the project off the ground, under the leadership of Eduardo, who arrived in 2019 after having worked at institutions such as Cielo and Santander. Today, the local team has more than 50 employees.

The Brazilian operation will be, coincidentally or not, the 26th of the N26. Globally, neobank is present in 24 markets in Europe and the United States, in addition to having ten offices. Altogether, there are more than 7 million customers, with an expectation of reaching 100 million — with no defined deadline for this. “We have a global vocation and culture. Even in Berlin, where the headquarters are located, we have people from over 80 nationalities working there.”

Given the size of the market, Brazil has the potential to become one of the largest N26 operations in the world. “We are not coming to be a niche player, but one of the biggest in Brazil”, emphasizes Eduardo. He believes that the period in which the project was paused gave the advantage of going deeper into the Brazilian reality and, thus, building something “really new”.

Money will not be an issue for the expansion of the N26 into Brazilian territory. As a subsidiary, fintech will have access to a business that is capitalized. In October, the German neobank raised a Series E round of $900 million, in a funding that valued the company at more than $9 billion, making it the second most valuable bank in Germany, behind only Deutsche Bank.

Since it was founded in 2013 by Maximilian Tayenthal and Valentin Stalf, the N26 has raised US$1.8 billion and has in captable investors such as Third Point Ventures, Coatue, Dragoneer Investment Group and GIC, among others.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

To take just a few examples… Nubank has consolidated its leadership and, with nearly 50 million customers, is about to make an IPO at NYSE. In just two years, C6 Bank was born and gained muscle to the point of being among the largest neobanks in the country, with more than 10 million customers.

Inter, with more than 14 million account holders, is preparing their bags to list their shares on Nasdaq. Next, created within Bradesco, took on a life of its own and now has more than 8 million customers. BTG Pactual took out of the hat BTG+, its digital retail bank.

It is, in fact, a more competitive scenario. Not so the N26 abandoned the plans, even though they say it missed the best moment of a boiling market to launch the Brazilian operation.

Starting this Thursday (4), fintech will start selecting people from the waiting list, currently with almost 200 thousand subscribers, to test and co-create the new product. Right now, a small group of family and friends — something like 200 people — are trying out the solutions.

“We're in full force to launch the launch by the first half of next year, with a local strategy, including all the features created from scratch, with local core banking, exactly because it was clear that we would like to solve a new problem”, explains Eduardo Del Guerra Prota, general manager Brazil of the N26.

The problem Eduardo refers to is the Brazilian's difficulty in dealing with money. For the executive, despite the experience with financial services having improved in recent years with the creation of digital banks, the experience with money needed to be improved. “We understand that focusing on financial health is the next horizon,” he points out.

It is with this strategy that the N26 intends to differentiate itself in the Brazilian market, clearly a country with many opportunities and inefficiencies. The intention is to lead what Eduardo classifies as the “second generation of fintechs”. The first generation, he says, gave a lot of focus to credit and payments, and brought services with lower costs for the consumer.

“What we want to do more with the second generation of customers is a more SaaS model. As it generates more value, it pays more”, says Eduardo. This operating system with a focus on financial health will, of course, have basic banking services and products, such as account, credit card and payments via Pix.

To put the digital bank on its feet in Brazil, at the end of last year, the N26 received the SCD (Direct Credit Society) license, which will allow it to grant credit with its own resources. Since then, fintech has resumed efforts to take the project off the ground, under the leadership of Eduardo, who arrived in 2019 after having worked at institutions such as Cielo and Santander. Today, the local team has more than 50 employees.

The Brazilian operation will be, coincidentally or not, the 26th of the N26. Globally, neobank is present in 24 markets in Europe and the United States, in addition to having ten offices. Altogether, there are more than 7 million customers, with an expectation of reaching 100 million — with no defined deadline for this. “We have a global vocation and culture. Even in Berlin, where the headquarters are located, we have people from over 80 nationalities working there.”

Given the size of the market, Brazil has the potential to become one of the largest N26 operations in the world. “We are not coming to be a niche player, but one of the biggest in Brazil”, emphasizes Eduardo. He believes that the period in which the project was paused gave the advantage of going deeper into the Brazilian reality and, thus, building something “really new”.

Money will not be an issue for the expansion of the N26 into Brazilian territory. As a subsidiary, fintech will have access to a business that is capitalized. In October, the German neobank raised a Series E round of $900 million, in a funding that valued the company at more than $9 billion, making it the second most valuable bank in Germany, behind only Deutsche Bank.

Since it was founded in 2013 by Maximilian Tayenthal and Valentin Stalf, the N26 has raised US$1.8 billion and has in captable investors such as Third Point Ventures, Coatue, Dragoneer Investment Group and GIC, among others.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.
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