why is Revolut 3x bigger than N26?

Revolut has 20 million customers worldwide, while its German rival has only 7 million. Why such a difference, when the two neo-banks have long been very close?

In just a few years, neo-banks have disrupted the traditional banking market. Among the benchmark players in Europe, we find N26 and Revolut – which have largely embraced the French market. If the pandemic has largely slowed the growth of the two fintechs, Revolut seems to have taken over its German rival.

A few weeks ago and for his seventh birthday, the British neo-bank was proud to have 20 million customers worldwide. For its part, N26 remains stuck around 7 million customers. Even though N26 is a year older than Revolut, and their valuations have long been close, what justifies this difference in success?

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A demanding German regulator

The reason lies partly in the knowledge of the customers (Know Your Customer) and the money laundering prevention system. The German financial regulator, BaFin, called N26 to order twice (in 2019 and 2021). If the neo-bank claims to have taken “all measures aimed at improving the reporting of suspicious activities”, the regulator has nevertheless imposed a monthly limit on new accounts.

In other words, N26 can only accept a maximum of 50,000 new customers per month since last November. Should we worry about its rigor? The German company seems to be doing everything to comply with BaFin’s expectations and it paid a fine of 4.25 million euros in September 2021 for having declared around fifty suspicious transactions too late.

Largely cooled by the Wirecard scandal in 2020, BaFin is taking all measures not to repeat this failure. It therefore takes special precautions when it comes to monitoring fintech on its territory. N26 has however obtained the support of its historical investors with a new fundraising of 900 million dollars (for a valuation of 9 billion) last October. She was now just waiting for the regulator to lift this restriction.

Inevitably, this constraint greatly penalized the growth of N26, which let its English counterpart slip away in the race for volume. Moreover, N26 still focuses mainly on Europe today, while N26 seeks to expand into markets – sometimes less lucrative. In 2022 alone, Revolut has opened offices in New York, Tokyo, Madrid, Barcelona, ​​Paris, Mexico City, Berlin, Budapest and Bucharest – with Mumbai and Bangalore set to open by the end of the year.

What about service?

Today, N26 and Revolut are no longer limited to being a payment solution “for abroad”. The two neo-banks have made a place for themselves alongside other network banks and online banks, to become everyday banking services. To attract customers, the two establishments have set up a free plan. In 8 minutes, you can therefore open an account and test each of the offers.

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However, Revolut announced last May a huge step forward, which N26 does not offer. From now on, French customers have a French IBAN for their account. What actually changes? This now allows you to have your salary paid directly to the Revolut account, or to pay your bills by direct debit also via Revolut (energy, water, telecom, etc.). N26 offers all its customers a German IBAN, which sometimes poses a problem for all these providers.

To continue its strong growth, Revolut is also trying to be more aggressive than N26 on most of its products. The British fintech is systematically one to two euros cheaper than its German counterpart on all premium accounts (up to the Metal formula). That said, in terms of user experience on the app, the two services are very close.

Another argument that Revolut has been putting forward for a few years: crypto-currencies. If N26 recognized that it was behind on this point, Revolut has been offering cryptocurrency trading since 2018. While 8% of French people said they had already invested in cryptos according to a KPMG / Ipsos survey (carried out in 2022) , this item is a feature that has largely swayed the hearts of users. During the pandemic, the British company was able to compensate for the weakness of bank card transactions with a high volume of its customers on cryptocurrency trading.

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