Germany-Based Banking Startup Number26 Expands to Six European Markets

The German financial services startup is expanding to six new countries. It will be available in France, Greece, Ireland, Italy, Slovakia and Spain as a first step towards offering a borderless banking experience across Europe. The latest expansion brings the total number of countries where Number26 is active to eight, after taking Germany and Austria into account (where it was initially launched).

The company provides more than 80,000 customers with accounts for cash withdrawals, deposits and overdraft services up to 2,000 euros via a slick smartphone app.

The company recently began providing a retail checkout-based alternative to bank ATM machines for cash withdrawals and deposits in Germany. It now counts 6,000 cash outlets, including supermarket chain REWE, or more ATMs than Deutsche Bank and Commerzbank combined.

Founded by two Austrians and based in Berlin, Number26 account holders receive a MasterCard payment card. There is no fee for setting up the account and issuing the payment card. The online bank offers worldwide money withdrawal at no additional cost.

The company offers basic current accounts via a license from its partner Wirecard Bank of Germany, which guarantees funds using the German Deposit Protection Fund. Its parent, Wirecard, also supplies Number26 with core banking software and transaction processing.

The company has raised $13.7 million in funding from investors including Valar Ventures, the VC fund of well-known Silicon Valley venture capitalist and PayPal Co-founder Peter Thiel.

Number26 CEO and Founder Valentin Stalf made this statement via email:

Our vision from the start has been to build Europe's first bank account for the smartphone. We see traditional banks as having failed to adapt to the demands of the digital generation. The response to Number26 has been fantastic and we're thrilled to expand to further markets.

The concept of an online-only bank is ideal for the European market. In Europe, opening an account in a traditional bank is itself an onerous process. One needs to setup an appointment first with the bank’s local branch, then submit a number of documents, fill in reams of forms and have an unproductive conversation with a customer representative who only tries to upsell you.

Number26 is not the first one to offer an online-only, mobile-focused banking experience. Tandem, a digital banking startup led by Azimo founder Ricky Knox and Capital One’s Matt Cooper, has been granted a license by The Bank of England. The startup will now begin the process of constructing its technology platform and meeting capital requirements.

The startup joins players like Atom in the UK in the quest to build mobile-centered alternatives to the small collection of giants that have dominated British banking for decades.

As some of you might know, Atom—the so-called (and imagined) branch-free bank of the UK—has also been provided its banking license by The Bank of England. Atom Bank has plans to develop products and services that can be delivered through mobile apps and online channels.

Spanish bank BBVA led the £82-million funding round for Atom Bank with a £45-million investment for a 29.5% stake in Atom. Among other investors were previous backers Woodford and Toscafund as well as Marathon and Polar Capital. Atom has raised £135 million to date in a period of 18 months and is looking to launch to the public in the beginning of 2016.