In October 2018, N26, a European, digital-only, challenger bank or briefly, neobank, launched in the United Kingdom. With up to one in four British millennials banking with a challenger bank and the market attractive to other digital-only challengers, the Berlin-based neobank’s UK expansion was hardly surprising. N26 had already successfully launched across Europe and embarked on an ambitious marketing campaign in the UK, positive about achieving similar success in this new market.
A mere year-and-a-half later however, the neobank announced it will be leaving the UK and closing all UK accounts, citing overwhelming uncertainty about the future of its banking license in the UK following the end of the Brexit transition period. Although uncertainty surrounding the Brexit deal outcome is undeniable, Brexit itself was a certainty already when N26 entered the market in 2018. In the year-and-a-half the neobank spent in the UK market however, they did not action a particular contingency plan for addressing it. In fact, behind the scenes, N26 was already dealing with several other challenges, including compliance, a failure to differentiate from competitors and to capture a sufficient customer base.
The challenges faced by N26 in the UK are not exclusive to N26 – they are general challenges any European neobank will likely encounter as they enter UK and should consider during the planning of their potential UK expansion.
This article will further elaborate on these challenges, beginning with Brexit and subsequently the additional market challenges, overlooked by N26, relating to UK expansion with the goal of providing actionable insight for any European neobank considering entering the attractive UK market.
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