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From star to construction site: What goes wrong at N26

Valentin Stalf, one of the best-known heads of the German fintech scene, is stepping down from the management of digital bank N26. From the outside, it all sounds completely voluntary - an orderly transition, a move to the supervisory board, everything very calm. But if you take a closer look, you realize that the bomb had already been detonated.

A "devastating" report by the financial supervisory authority Bafin shook the foundations of N26 to the core. It was about serious deficiencies - and not for the first time. Bafin had already put a stop to the neobank's growth in 2021. Now, in the fourth quarter of 2024, the auditors sounded the alarm again: weaknesses in risk management, problems in combating fraud and an organization that obviously cannot keep up with growth. In short: the bank was not running smoothly.

According to Handelsblatt, Bafin is said to have come to the conclusion that N26 would simply be unable to cope with further growth. A resounding slap in the face for a company that was once hailed as "the future of banking".

Investors intervene - and the boss leaves

A textbook move: the pressure from investors increased and suddenly the co-CEO was superfluous. In the start-up world, this often means: either you go - or you're gone. Valentin Stalf tries to present his resignation as a voluntary step. But anyone who knows the context will realize: this is a clean-up.

The Supervisory Board - previously a mini-troupe of just four people - is to be expanded. Stalf wants to move there and remain with the company "strategically". Sounds like a dignified retirement - but also like damage limitation.

His co-founder Tayenthal remains in office, but rumors are also swirling around him. Both founders still hold around 20 percent of the shares. So they are not completely out - just no longer at the helm.

From billion-dollar hype to a reality check

In 2021, N26 was Germany's flagship fintech. A valuation of 7.7 billion euros, a hip app, a young team - everything sounded like a digital awakening. But as is so often the case in the start-up world, reality eventually catches up with all the hype.

Today, N26's valuation is probably only a fraction of that. Although the bank is now making a profit and its turnover is over 500 million euros, the shine is gone. The rapid success obviously has its downsides: lack of structures, lack of control, excessive demands at many levels.

And the customers? After all, there are five million of them - most of them probably because of the ease of use and the cool image. But who wants to stay with a bank where the regulator regularly switches to red alert?

Banks - including online banks - have a responsibility.

A digital awakening needs more than fancy apps and visionary founders. And it doesn't end with a fancy pitch deck or a round of investor meetings. If Bafin has to intervene several times, this is a sign that something is not only wrong internally, but also culturally.

Good ideas are valuable, but without proper implementation they remain hot air. Bafin is not a spoilsport, but the customer's protective shield. And if the report turns out to be "devastating", perhaps it is not only the CEO who should be replaced - but also the bank should honestly ask itself whether the business model itself is still viable. After all, trust is the most important asset of any bank - and you can't get it back at the touch of a button.