N26 app on a smartphone screen
Image: Screenshot/N26.

Berlin-based neobank N26 leaves the U.S. and officially lands in Brazil in January 2022

Fintech wants to introduce the concept of fincare to Brazilians in a move that could be the company's strategy in other emerging markets. The first 2,000 customers will have access to the app in January.

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With 7 million customers in 25 markets, the German neobank N26 is landing in Brazil with a different proposal from its local competitors. Introducing itself as a ‘second generation’ fintech, the company wants to introduce the concept of ‘fincare’ to Brazilians, helping them save and take care of their financial life. However, how exactly N26 will do this in Brazil is still unclear.

In an interview with LABS, the company’s CEO in the country, Eduardo Prota, said that the first 2,000 customers – selected from over 24,500 registered to participate in this stage – will gain access to N26’s app in January 2022. The others will be activated gradually over the first half of next year. In addition to those enrolled in this selection process, there are 200,000 Brazilians on the platform’s waiting list.

“Many of the solutions available on the market today expect people to jump the abyss of financial planning alone, but taking that leap demands a lot from people. What we want is to guide customers, step by step, along this path and in such a way that they benefit from it. We don’t want them to have to make that leap alone to achieve financial health,” said Prota, noting that the world of finance also suffers from FOMO (Fear of Missing Out ), that is, with people being inundated by information and graphics about how to invest but without the time or ability to understand and put all that knowledge into practice.

The company’s positioning makes sense. With so many options available in the market and some competitors already witnessing a slowdown in the pace of customer acquisition, only a different value proposition will attract people.

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It remains to be seen whether these customers will understand the fintech‘s message – and in time not to get caught up in similar initiatives from the competition. In November, Nubank announced the acquisition of Olivia, an app that helps people spend better based on their financial habits. And in July, PicPay, the largest digital wallet in Latin America and a super app wannabe, bought Guiabolso, the pioneer personal finance app in open banking in Brazil.

Also in November, the N26 announced its departure from the United States. With practically two years of operation there, the digital bank will leave around 500,000 accounts behind. Analysts say the N26 did this to focus on Europe, where it already has a bank license and, therefore, much greater growth potential. However, other experts are betting that not only the lack of a bank permit but the lack of brand awareness in the U.S. contributed to N26’s departure from the country.

The CEO at N26 Brazil, Eduardo Prota. Photo: N26/Courtesy.

Despite the platform’s official arrival in Brazil now, the first announcement of the N26’s arrival in the country was made in 2019. “We started the project at the beginning of 2019. I came to Brazil with two more people from Berlin, and the goal was to execute the project and launch it in mid-2020,” says Prota.

The company structured itself and applied to the Central Bank for the Direct Credit Society (SCD, in the acronym in Portuguese) license in early 2020. This operating model was established by the National Monetary Council (CMN) in 2018 as a way to enable the emergence of new fintechs without the need for associations with traditional financial institutions.

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“But at the beginning of 2020, we realized that we needed a different strategy. We paused our operations, and then the pandemic came, which did not help us resume the project quickly. But it must be said that we learned a lot during this period. One of the things we learned is that we needed a proposal tailored to the Brazilian public, focused on the population’s financial health. Seventy percent of people still spend more than they earn here in Brazil. And this is a different problem than N26 had when it started in Europe, which was a problem of access, quality of service, and high fees,” he said.

The SCD license came out in December 2020. This means that, in addition to operating payments, N26 in Brazil can also issue cards or even offer credit with its own resources.

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Prota did not reveal metrics or goals for the operations in Brazil but said the country could be a key market (if not the biggest market) for N26 to reach its global goal of reaching 100 million customers worldwide.

Founded in 2013 by Valentin Stalf and Maximilian Tayenthal, N26 started operating in Europe in 2015 and presents itself as the first digital bank globally. Since then, it has raised more than $1.8 billion in investments from Third Point Ventures, Coatue Management LLC, Dragoneer Investment Group, Insight Venture Partners, GIC, Tencent, Allianz X, among many others.

In October this year, it raised a $900 million Series E round, being valued at more than $9 billion.