Fintech unicorn N26 under scrutiny from German banking regulator
Digital banking starlet N26 is under scrutiny from German banking regulator Bafin, after reports emerged of fraudulent transactions and problems with the bank’s communications structure.
Concerns about N26 were first reported in October by German newspaper Handelsblatt, before further inquiries by Bafin were said to have revealed numerous deficiencies at the fintech startup.
N26, which counts Monzo, Revolut and Starling Bank among its rivals, has now been asked to correct the shortcomings.
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Customers complained of fraudulent activity going ignored at the bank due to poor reporting processes, in one instance relating to theft of about €80,000 (£68,848).
Users said they were unable to get a response through its chatbot or by email for several weeks, which were the only means of talking to staff.
Banks are also said to have criticised N26’s ability to be contacted and communicated with regarding fraud occurring in its accounts and other criminal activity. Shortcomings were identified in terms of staffing, outsourced task management and engineering, according to reports.
A representative for Bafin declined to comment, saying they could not discuss an individual bank or case.
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A spokesperson for N26 said: “N26, as with all licensed banks, is subject to regular audits, including those by regulatory bodies such as Bafin.
“Any findings are promptly reviewed, implemented and monitored in coordination with Bafin. We strive to meet all requirements consistently and take any required actions as quickly as possible.”
The bank added it had tripled the number of employees in its customer service division in the last year alone, in order to better handle the complaints.
N26 closed a $300m (£229m) funding round at a $2.7bn valuation in January, briefly becoming Europe’s most valuable fintech startup.