Why does it still take two days in Europe for a card transaction to show up in your bank statement? Meet Number26, the Simple of Europe — a fintech startup that promises to fix all the oddities of the European bank system. In other words, Number26 is a bank that doesn’t suck. The startup is launching today in private beta on stage at TechCrunch Disrupt London.
“We are providing Europe’s most modern current account, bank account,” co-founder and CEO Valentin Stalf told me in a phone interview before Disrupt. “Attached to it comes a MasterCard.”
As a reminder, commercial banks in Europe suck. In the U.S., you can show up and open an account in five minutes. In Europe, you need to make an appointment with a bank’s local branch, bring documents and fill a lot of forms. You can also sign up online, but you’ll have to go to the post office to send documents.
When you sign up for a Number26 account, the process is much easier than any other bank — you don’t have to physically send anything as the entire process takes place on the company’s website. The company told me that you can sign up in five minutes.
At the very end of the process, Number26 starts a video call to verify your identity. You simply show your passport to the webcam and answer a couple of questions. A call is much less painful than having to go to your local post office to send copies of your passport.
After that, you will receive a debit card that works in all MasterCard ATMs and shops. So far, Number26 doesn’t seem very different from traditional online banks in Europe.
But this is when it gets interesting. Number26 focuses a lot of its attention on the user experience of the mobile app. In addition to being a beautiful app, there are a few interesting features that make the app stand out of the crowd.
First, transactions show up in real time. Every time you use your card, you can open the app a few seconds later to see the transaction right on your statement.
“When you look at a MasterCard transaction, all of these transactions have an online authentication,” Stalf said. “The terminal contacts the MasterCard cloud and the cloud network tells that this card number is linked to this processing company. We see what’s happening with the processing company in real time, because this transaction needs to be authorized.”
Other banks could technically do the same and display transactions in real time. But it’s more difficult for them to implement these features due to their existing infrastructure.
You can also open the app and block your card with a simple button. But if you find your card a few minutes later, you can simply unblock it. You don’t need to wait and receive a new card.
If you lend your card to a friend that you don’t really trust, you can also block ATM transactions for let’s say an hour. Whenever you get your card back, you can unblock ATM transactions in the app. Everything works in real time.
Finally, Number26 added a few financial tools in its mobile app. For example, you will see how much money you spend at restaurants or clothing stores. It’s very reminiscent of Mint, but Mint is only available in the U.S. and Canada.
And then, there are all the reasons why you wouldn’t trust a startup to manage your money. Once again, it works a lot like Simple.
“Because we need a banking license, in the background, we have a banking partner,” Stalf said. “The money sits in this bank. Regulators require us to do that. And on the other end, because it’s a German banking license, all the amounts are insured until something like 6 million euros.
While the startup is based in Berlin, a German banking license lets you operate in other European markets. So far, the company accepts clients in Germany, Austria and Switzerland. But it will be very easy to scale to more European countries in the future.
For the end user, there is no card fee for EUR payments, and no service fee for your account. Number26 takes a cut of every MasterCard transaction. Its partner bank will also invest the money sitting in the bank accounts. All of this is transparent for the end user.
In the future, the startup will add new features to make the product more compelling. For instance, Number26 plans to add overdraft and savings options. It is also looking into building a corporate solution as well.
You can also expect innovative futures that you won’t find in your existing banking app. For example, the company wants to use your smartphone’s geolocation to compare it with the location of your card transactions. This way, Number26 can detect suspicious activity and ask you to accept or block a transaction.
In the long run, the company wants to integrate other fintech startups directly into your Number26 account. “We could integrate TransferWise for international transfers for example,” Stalf said. “The idea is to be the connector for finance startups.”
The team of 17 has raised $2.6 million so far (€2 million) from Earlybird Venture Capital, Redalpine Venture Partners, Axel Springer Plug and Play Accelerator. It will be hard to convince conservative customers and compete with traditional banks and their advertising money, but Number26 definitely has a chance when it comes to creating the best banking experience in Europe.
Q&A
Judges: Niko Bonatsos (General Catalyst), Jon Bradford (Techstars), Bindi Karia (Silicon Valley Bank), Brenden Mulligan (Cluster).
Question: Your app is gorgeous. There has to be a major pain point that you are solving to make people switch. How did you find that real time data was a pain point?
Answer:
Question: The relationship with the regulator is complicated. How do you do it?
Answer: We have a banking partner in Germany. We’re doing much more than using their technology. And we can do video conference calls to verify customers all over Europe.
Question: What’s the plan for making money?
Answer: We have two short term revenue streams. But we have long term plans as well, becoming a fintech hub.
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