German challenger bank N26 is quitting the UK less than two years after launching here, blaming Britain’s exit from the EU.
N26 said on Twitter on Tuesday afternoon: “With the UK having left the EU, we will in due course be unable to operate in the UK with our EU banking licence, so we will be leaving the UK and closing all accounts.”
A spokesperson said the bank had “several hundred thousand” UK customers. All UK accounts will close on 15 April 2020.
N26 is the first bank to announce it is withdrawing from the UK due to Brexit. Britain officially left the EU on 31 January and is now in an 11-month transition period.
The withdrawal from the UK comes less than two years after N26 came to Britain. The Berlin-headquartered lender launched here in October 2018, over two years after Brits first voted for Brexit and six months before Britain was initially due to leave the EU.
N26 has a German banking licence and EU rules allow it to be ‘passported’ into Britain. Passporting rights will end at the end of the transition period on 31 December 2020, meaning N26 would have to get a UK banking license to continue to operate here.
A spokesperson confirmed N26 had not applied for a UK banking license and said to do so would have required “significant operational processes and costs”.
“We would need to undertake complex regulatory measures and product updates to continue operating in the UK,” the spokesperson said.
N26 mounted an eye-catching marketing campaign on the London Underground last year as it pushed to acquire customers. The Telegraph reported last April N26 British customers had opened 200,000 accounts in the UK, and the bank was signing up 1,000 new customers each day.
However, it faced stiff competition from home-grown competitors such as Monzo, Starling Bank, and Revolut.
Sarah Kocianski, head of research at consultancy 11:FS, told Yahoo Finance UK that N26’s exit was “not a surprise” in the industry.
“Why bother to get and try to maintain a license in a country where you’ve struggled to gain traction and you’re up against serious competition?” Kocianski said. “Makes sense for N26 to cut its losses and focus on other, easier market in Europe.”
N26 is one of a number of app-only banks that have launched across the world in the last decade. Launched in 2013, it has expanded across Europe rapidly and now has over 5m customers across 26 countries. The startup was valued at $3.5bn (£2.7bn) last year and backers include Silicon Valley billionaire Peter Thiel.
Will Sorby, general manager of N26 in the UK, said in a statement provided to Yahoo Finance UK: “We would like to thank all N26 customers for their support. We’ve planned the next steps carefully to ensure this process is as smooth as possible for every customer in the UK.”
N26 has around 80 people across the UK and Germany working on the UK market. The company said most would be re-deployed to other projects within the business.
Thomas Grosse, chief banking officer at N26, said: “Although we will be leaving the UK, we will continue our mission to radically transform the global banking industry through innovation and the power of technology and design to build a bank the world loves to use.”