German Startup N26 to Offer Loans of Up to $56,000 via Smartphone

  • Fraud prevention function planned for next year, CEO says
  • Fintech company seeking more partners for new products

Berlin-based smartphone finance startup N26 plans to offer consumers speedy loans of as much as 50,000 euros ($56,000) by the fourth quarter after recently securing a European banking license, its chief executive officer said.

Funded by billionaires Peter Thiel and Li Ka-shing, N26 will follow up next year with a feature that uses artificial intelligence and location technology to alert customers of suspicious activity on their cards or block account activity automatically, CEO and founder Valentin Stalf said in an interview Thursday in Frankfurt. An insurance offering is also planned, he said.

N26 is among a growing number of financial technology startups that focus on putting services on smartphones to grab customers from traditional banks. The company is moving from a partnership with Wirecard AG to take over its own banking functions after gaining its banking license in July. That’s letting it move faster without having to clear product plans with an outside party first, Stalf said.

"The most important thing is to be independent," Stalf said.

The next step for N26, which has about 220,000 customers, will be adding more partners for credit, insurance, savings, investments and money transfers. It’s building an application programming interface to let it strike partnerships for new financial products more readily without having to fund all of the development.

Today, N26 works with a single partner for each of its auxiliary products, for example with TransferWise Ltd. for international money transfers and Frankfurt startup Vaamo for investment portfolios.

"We can’t build our own products in every dimension," Stalf, an Austrian-born entrepreneur, said before a presentation at a bank conference. "The goal is to have four to five partners for every dimension."

Stalf said N26’s anti-fraud feature will analyze normal spending habits and location to prevent crime. Users could get an alert or even have N26 block purchases if for instance a consumer is on the road in Berlin and someone tried to buy a pair of sneakers at a store in Frankfurt with their card.