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N26 Co-founder Maximilian Tayenthal talks growing one of the fastest-growing mobile banks in the world

McKinsey Digital | Feb 26, 2021

N26 Maximilian Tayenthal - N26 Co-founder Maximilian Tayenthal talks growing one of the fastest-growing mobile banks in the world

Setting a bold vision, adapting the business to respond to market feedback, and putting customer satisfaction first has enabled digital-banking start-up N26 to grow rapidly into a global bank valued at $3.5 billion.

Creating a new, global business in a regulated industry such as financial services is challenging. Setting the organization up for global scale and turning it into one of the most successful digital disruptors comes with even greater challenges. In a conversation with McKinsey’s Jerome Königsfeld and Lukas Salomon, N26 cofounder and co-CEO Maximilian Tayenthal reflects on learnings from the company’s rapid growth and rollout across 25 countries.

Ability to Adapt

Lukas Salomon (LS): You launched N26’s banking product six years ago and have scaled rapidly. Looking back to your early days, how did you come up with the idea for the business?

Maximilian Tayenthal (MT): We originally started with a different idea: we were offering a prepaid card for teenagers. The card was connected to an app through which their parents could control the card. But when we launched a beta version of this product, we quickly discovered that parents weren’t actually using this product for their kids—they were using it for themselves. We then realized that we might be able to play in a bigger arena, as our product had all the elements of a digital-banking offering: cards, an app, and accounts into which people could deposit money. If we could build a strong product, we’d be able to compete with large incumbents in their core business.

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LS: After identifying that opportunity, what were the first indicators that showed you’d actually be able to scale it into a billion-dollar business?

MT: There wasn’t one specific moment in which we really knew it’d be a success.

As soon as we launched the banking product, we saw strong excitement from customers and confirmed that there was a need for our product. We had a waiting list of 50,000 prospects.  Once we understood that potential, my co-founder and I set our long-term ambition.

We knew we didn’t want a quick exit. Instead, we wanted to build a global financial institution, impact the lives of 100 million customers, and compete with the biggest banks worldwide. I think setting this level of ambition early on is what differentiated us from many other start-ups—we always follow our North Star target of 100 million customers.

Navigating rapid growth requires experienced leaders, scalable back-office systems and full transparency in reporting

Jerome Königsfeld (JK): What were the organizational measures you took to enable rapid scale-up?

MT: That’s definitely been challenging. We started as a team of two in our living room in Vienna and knew every tab and cell of our business-case spreadsheet. But eventually you realize that you’ve grown so much that you can no longer do that and need to delegate.

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In the beginning, you dedicate all your focus to the product, which means that back-office and organizational processes sometimes lag behind.

With our growth rates, it has been particularly hard to keep up with the pace. At times, we were doubling both our customer base and our employee count every six to eight months. This came with major challenges: new team members were sometimes onboarded by someone who had joined the company only four weeks before them. Somebody hired in a stand-alone role could find themselves managing a team of 20 direct reports six months later.

When you’re growing so quickly, it’s vital that your systems and organizational processes are scalable. Think about the situation you want to be in two years from now. Select systems that don’t just work for the 100 employees you have today but for the 500 or 1,500 you might have by then. Make sure that you also hire people who’ve seen big organizations before and who are able to lead others. We may be a young team, but today we’re hiring people with a lot of experience, especially for executive roles.

LS: While your role encompasses a broad set of responsibilities across the company, you also served as the CFO. How do you see the role of the finance function in a rapidly scaling business?

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MT: One of the key responsibilities is fundraising. At around $3.5 billion, we’re one of Germany’s highest-valued and most well-funded private start-ups, but we still have a very big vision and need to make sure that we find sufficient capital to fund our global expansion. We’ve greatly benefited from the liquid private markets of the past few years but are now also considering a potential IPO in the future.

JK: What about monitoring and reporting? How do you ensure you’re on track and establish transparency on plans and budgets when your business transforms so quickly?

MT: We’re passionate about data. We monitor dozens or even hundreds of key metrics such as sign-ups, churn, cross-sells, upsells, and subscriptions in real time. Live dashboards allow everyone to track progress every minute. On the financial side, we have a full P&L every month but monitor KPIs within the teams daily.

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