2020: The Fall of the Neo-Bank?
Contributor: Meaghan Johnson, Founder, Digital Magss
In 2017 I moved to Berlin and, in addition to the beautiful apartments, lively nightlife and cheap beer, I was incredibly excited to get my hands on an N26 bank account.
Back then, N26 was the epitome of the customer friendly mobile bank that put fear into traditional banks. Alas, my dear fintech friends, this is no longer the case. N26 has failed at keeping pace with customer experience, something at the heart of its USP. This includes the increasing amount of bugs in the app, a lack of timely and relevant products, and failing to offer any sort of personalised customer experience.
In this article I’ll share with you:
- How various parts of the N26 experience have unraveled
- An analysis of N26’s promises around customer experience, specifically if they hold true
- How changing customer expectations may leave N26 and it’s cohorts behind
Why N26 in the first place?
N26 is the logical bank for non-German speakers moving to Germany. The application is entirely digital, in English, and it appears to pretty much accept anyone regardless of credit standing. In 2017 when I opened my N26 account, I had access to savings (although ineligible), lending (also ineligible), investments and insurance products. Despite the lack of eligibility, I was impressed by their breadth of products, especially when compared to a Monzo, Starling and Revolut. N26 partnered with other fintechs such as Clark, TransferWise, Vaamo, AuxMoney in order to “offer a full suite of banking products.” I quote this here and will return back to this in the concluding remarks.
The first year and a bit as an N26 customer was great. The app worked perfectly, I was investing entirely within the app, their customer support was efficient and friendly, and they introduced their Spaces features. Spaces really helped me manage large expenses such as rent, health insurance, quarterly income payments, VAT payments, while keeping a healthy Holiday pot. It resonated with me and got me hooked unlike other types of savings pots I’ve tried to use.
Where the experience began to unravel
After the first year a few bugs in the app started to creep in. The first had to do with Touch ID. Despite opting into Touch ID, after about 1–2 weeks the app would randomly ask me if I wanted to opt into Touch ID. I would select “yes” but then the app would not fully load properly and I could not see my balance. The result being I had to fully opt out of Touch ID and now I login with my password only. Annoying, but not the end of the world.
The second bug came about in October 2019 when I activated discreet mode for a UX workshop with a client. I wanted to show them the Spaces features in a live demo, but as this is my main account did not want them to see my full balance and transactions history. Discreet mode conceals the balance and transactions and was great for the session. After the workshop I reversed the discreet mode, but this reversal was not working and now every 5–6 times I log into my app, discreet mode is activated and I need to again manually reverse this. Again not the end of the world, but combined with the Touch ID bug, I cannot view my balance and transact as quick as I expect.
The third bug, is creeping towards end of the world status and is found within the Chat feature. The past few times I have had to chat with a customer service representative, they have had to look into something. No biggie, except when I leave the app or get logged out and try to go back into to respond, I cannot. The chat window still shows, but there is no way for me to respond. I’ve lost the chat. This would be fine, if you could proactively message them, but messages are only one-way — Bank to Customer.
Around May I decided to utilize the Insurance feature within the app, which allows me to view and store all my insurances policies within the N26 app. Fully immersing myself in the German way, I now have about four types of insurances.
I added my Private Health Insurance to the app, which I was told would take about 2 weeks to process. Weird I thought, what needs processing? Low and behold two weeks later I received an email from my broker:
I just received notification that your plan is being transferred to another broker. I’m a bit surprised about this, since we only just set it up and I had the impression that all had run smoothly enough.
I wonder if there has been some misunderstanding?
Occasionally this happens when someone signs up for an online insurance service which automatically triggers a transfer of broker, even though the client is often not aware of this.
I apologised to my broker, told him about the N26 insurance feature, and asked how to amend the situation:
That sounds likely! It’s happened several times before because of the N26 app, but not previously with health insurance.
Unfortunately the procedures for transferring back are more cumbersome than signing up through N26. Can I send you the required forms?
Okay so that’s annoying. Living in Germany my life is characterised by lots of forms, and I was certainly annoyed with N26 for adding another form and disrupting the relationship between myself and my broker.
The second issue around insurance came with filing a claim. I pay for the N26 You, a premium version of the account which costs €9 or so a month. This includes travel insurance. While traveling back from Nigeria I had an unfortunate incident with my iPad where it got…let’s say heavily crushed. The screen was pretty demolished and a fellow fintech friend suggested I try my travel insurance. I went to the N26 website to check my coverage.
Okay, let’s read more.
Okay, so now I’m on N26 You page, and I see there is Mobile phone coverage, but according to the text it is only available to Metal Members? I’m confused, so I decide to ask Customer Support. I told a human what happened. I said I couldn’t find the relevant section in the app that outlines the procedure for mobile device claims. They told me to contact the generic email for making claims. I said I see this email but what do I need to include by way of evidence for a mobile device claim? They said just email them. So I emailed explaining what happened. Response below:
Okay so I’m not covered, which is fine, but why wasn’t this made clear on the website or by the customer service rep? Once again, I felt like N26 was causing me more admin than I would like to deal with from my bank.
As mentioned before, I was a user of N26 Invest, which was a partership with Vaamo, which was then acquired by Money Farm. The N26 Invest feature was great as I could invest any amount, with literally 2 clicks. The funds chosen were good, and it was easy to monitor and manage. The only feature it lacked was any micro-investing or smart savings capabilites that are increasingly common in the mobile banking space (e.g. Acorns, Oval Money), and again more on this in the Conclusion.
In the summer I received an email from N26 informing me that N26 Invest was closing.
The reason stated by N26:
“Since launching N26 Invest in 2016, we’ve gone on to develop more products & services that reflect our growing customer base and the increasingly global nature of our bank. We are committed to bringing you new products that will make your financial lives easier and tailored for your needs in the future.”
Hmmm where are these new products and services? The partnership with Lime? Spaces? These do not warrant the closing of an investment offering in my opinion.
Anyways, I decided to go with option 1 and liquidate the funds. I tried to do this in the app, but I literally could not get out the last EUR 10 because it said I had to contact an agent. Me being lazy, I forgot to contact the agent and then my last EUR 10 defaulted to option 3, which means I was stuck with an old-school German Bank in FFB.
Contacting and closing the account with FFB is a whole different post. It was painful, slow, and extremely inefficient. The cessation of the offering is not entirely the fault of N26 I am sure, but they could have done a lot more to make the process easier for it’s customer, such as:
- Instead of a generic email that was very wordy with links to guides, why didn’t the bank link me to the appropriate action in the app and guide me through the process?
- Go above and beyond in helping with dealing with a new provider. Option 3, keeping the account with FBB Bank informs us that they will contact us. But actually drilling down, FBB contacts the address they have when the account was open. I moved house, and therefore never received any contact from FBB. Surely N26 could see that I changed my address, a little personalised support saying “hey, just a heads up, you may need to contact FBB to tell them you changed your address”, would be helpful.
Where does this leave me and N26 now?
My dear readers, I have shared my experience with N26. At the end of the day it keeps my money safe, while acting as a basic mobile current account with bugs. Its design and ease of use does have a step above some of the traditional banks here in Germany. However from what I have seen in terms of roadmap from clients and leading banks in Europe, N26 will soon fall behind if they maintain the status quo.
Can N26 still fall under the “new mobile banks that win based on customer experience?” Does it actually deliver on what it claims to do? And is what it is claiming actually in line with customer expectations of 2020 and beyond? Well let’s look at how N26 positions itself:
I’ve chosen 4 promises of N26 relating to customer experience.
- “The Bank you will love”
- “Smart, flexible banking in real-time”
- “Dream Big and save money with Spaces”
- N26 You: Banking, personalised
Let’s start with 1. The Bank you will love. What would I love in a bank? Well, options to easily save and make money, that’s tailored to how I spend, my goals, and what I can realistically achieve. This includes advice on how I am spending, and what I should not be spending on. A full-suite of products that work together for me to achieve my save / make money goal. Despite the suite of products N26 offer(ed), they do not work together.
Number 2: Smart, flexible banking in real-time. I struggle to identity anything smart about the N26 experience. There appears to be no machine learning or clever algorithms, no contextualised nuggets of advice related to spending, saving or servicing. Nothing really seems to work for me. Furthermore, N26 does not offer any account aggregation features. How can it be smart and show me my total banking picture in real-time?
Number 3: Dream Big and save money with Spaces. While I absolutely love Spaces for how it allows me to segment my money, there is nothing clever or personalised with spaces. Is “dreaming big” manually putting money into a pot? Dreaming big for me would be a bank that figures out how much I can save each week, putting that money into a savings account that has a range of low-cost ETFs or other investment opportunities. It would see I spent EUR 50 less on Drive Now’s in a month and automatically put that money into the Savings / Investment Account. It would see as a Business Owner that I am paying taxes quarterly and ID some quick win solutions for gaining a little bit of interest on that money in the quarter.
Number 4: Banking, Personalised. Oh dear, offering a few different colors for a card is not personalisation. Claiming to be a lifestyle bank by offering a range of pre-defined, un-personalised rewards is neither personalisation nor lifestyle banking. This idea of Lifestyle banking has to be called out for what it should be: an offering of banking products, services and experiences that work towards your lifestyle goals, e.g. buy a house, save enough so you can travel the world for a year, be environmentally friendly, save for your Kids’ education. A few perks do not equate to lifestyle banking.
My parting words
As we enter 2020, we are embarking upon a new realm of digital banking. In this post-post PSD2 world, consumers are focused on taking back personal data, doing good things for the environment, whereas identity is becoming digitised, and digital experiences rather than products are winning over customers. This last point is incredibly important in any bank’s strategy going forward, and in some instances, it is quickly becoming the pinnacle.
I fear that N26 and its mobile banking cohorts aren’t on the right path, as they are struggling with customer experience stagnation and will soon fall out of favour with active users*. This weekend I was involved in a lively debate on Twitter about Embedded Finance, and there was one comment: “just using the Monzo card.” Immediately I thought about why I would proactively select my Monzo card above any other cards I have. To be honest, I see little value in using my Monzo card. The “PFM” Monzo offers is an outdated experience, and really gives me no reason to use this card over Starling, N26, RBS etc. etc.
Actually my card of preference in Germany, and over N26, is the Miles and More Gold Card from DKB (yes, DKB the old school German Bank). The accrual of Miles and More points toward my Lufthansa flights (to be used towards upgrades only, as I am trying to reduce my carbon footprint) is of huge value to me. In the absence of any true, digital, personalised experiences I am reverting back to good old points based cards and exploring how to tie this card to my mico-savings and investment products.
As I write this in 2020, I feel like the neobanks of the mid to late 2010’s are no longer giving me any value. They aren’t offering me any fantastic digital, let alone personal experiences. For now, I will keep my N26 account, but continue to utilise other products and services to build the experience in my own DIY manner, both from a financial and lifestyle perspective. But when that magical bank comes along there won’t be any hesitations to jump ship.
Thank you for reading, and I look forward to hearing from you via firstname.lastname@example.org
*There is still immense value for people who have just moved to Germany in opening up an N26 account.
Contributor: Meaghan Johnson
Originally published on Medium