Despite an urge to outgrow its digital rival Revolut, a significant loss in N26’s workforce suggests growing discontent with the current management and their strategy.
For most of N26’s history, the bank has been locked in a struggle for market space with Revolut. From the beginning, both banks offered similar subscription products at similar price points, expanded in similar areas, and had similarly high expectations about their success.
Similar, however, does not mean the same, and in most categories, N26 has been bested by its rival. Revolut’s product range is larger and more comprehensive, including the likes of wealth management services, children’s banking, and a range of cryptocurrencies and commodities to buy from.
Revolut has expanded into more areas, sooner and more aggressively, reaching 12 million customers in 34 markets vs. N26’s seven million customers in 25 markets. And while Revolut has recently shown signs of being profitable, net losses for N26 in 2019/20 were €110m ($135.3m), up 50% from €73m ($90m) the year before.
N26 has grappled for years with how it can differentiate its proposition from Revolut. In trying to stand out, however, N26 has pursued an array of ideas.
These include a money transfer feature that doesn’t work for users of other banks, fees for premium customers that are free at other banks, and transparent cards that customers are sometimes afraid to show off for security reasons. And while the bank has also come up with a range of unique features and business niches, this hasn’t been enough to be eclipsed by Revolut.
N26 employee relations
Unfortunately for N26, its employees agree with this sentiment. Over the last 12 months and despite trying to expand with another 500 roles globally, the bank has actually lost 300 staff, with “trust and confidence in the N26 management” apparently “at an all-time low.” Part of this is down to cost-cutting.
In an effort to continue growing, N26 is likely to be hiring employees at much less attractive wages and keeping current staffing costs down. The Covid-19 pandemic is likely to have contributed to this, with twice-yearly salary reviews shelved. However, this is just the latest in a string of blunders that have cost the company dearly.
This is not new territory for the bank, however, with N26 having a history of bad employee relations. In August 2020, the bank’s founders tried and failed to break up a works council, a temporary employment body that oversees disputes within a company.
And while it’s common for staff to leave startup jobs for a more comfortable position or to start their own business, this tends to be senior people leaving. There have been numerous accounts of senior executives from rivals Monzo, Starling, and Revolut but nothing to suggest severe problems trying to hire and then keep their workforce.
N26’s continual failure to outcompete Revolut has forced the bank to make bad decisions and cut corners, the consequences of which are now catching up to it. The bank has yet to figure out what its specialty should be and does not have many reasons why consumers should go to it instead of Revolut. N26 needs to work on these points now before it finds itself consumed by its digital rival altogether.