N26, a mobile bank, was founded in 2013 by Valentin Stalf and Maximilian Tayenthal. Since its launch, N26 has built a network of more than 5 mil- lion customers in 24 European countries. In 2019, N26 began operation in the United States in partnership with Axos Bank, and in 2020 it applied for a banking license in Brazil. In total, N26 has raised close to $800 million from investors and, with a market value of $3.5 billion as of May 2020, it is one of the most valuable and well-funded fintech startups in Europe.

Traditional banks typically employ a distributed IT landscape. Banks usually operate numerous self-developed software applications, but many of these are only partially adaptable to changing processes and needs. An online bank, however, has the scope to optimally design its IT landscape and customer inter- action processes based on current needs-such as compatibility with a mobile app-without having to take legacy systems into consideration. N26 is one of the few fintech banks that is hosted entirely in the cloud on a single system. N26 is able to take advantage of a modern technology stack and has over 100 microservices running in production in different software languages and frame- works. For instance, in connection with its expansion into the United States and Brazil, N26 software engineers introduced a new layer for the configuration of geographic regions into their software application and infrastructure architecture. In the modern mobile economy, this can be an important competitive advantage.

Stalf and Tayenthal conceived N26 as offering simple and customer-centric processes that could be used anywhere in the world. All of the bank's processes can be carried out completely online, from identification via video chat to opening an account. In its advertising, N26 boasts that an account can be opened within 8 minutes. And N26 aims to grow further: the number of customers world- wide was expected to double in 2020 from 5 to 10 million, with COVID-19 hastening the adoption of digital banking. N26 has responded by accelerating the development of various new features, such as an instant banking feature that allows customers to add a digital version of a new card to their mobile wallet, giving them immediate access to contactless payments.

N26 previously introduced Cash26 to further improve their services in cash- based operations. This service allows customers to deposit or withdraw cash at checkout across a network of partner companies: the N26 app generates a bar- code that controls the withdrawal or deposit, and this is simply scanned at the partner company's checkout to complete the transaction.

Banks have always been an attractive target for criminals, and their IT systems get more than their fair share of cyberattacks. N26 is investing heavily in the development of security systems, including the use of artificial intelligence, to combat phishing, a common problem in online banking, as well as other forms of cyberattack. It has also increased the number of customer service personnel to over 600 people in order to be able to offer better customer support. It expects to operate at a break-even level by the end of 2021.

 

Sources: Nadine Schimroszik, "German Fintech N26 Eyes More Fundraising before IPO in 2022-CEO," Reuters.com, December 17, 2020; Trotz Corona-Krise: "Smartphone-Bank N26 wächst weiter," Der Standard, August 11, 2020; N26 Corporation, "N26 Raises More Than $100M in Extension of Its Series D Funding," Press Release, n26.com, May 4, 2020; "Smartphone-Bank N26 hat mehr als fünf Millionen Kunden," Der Standard, January 23, 2020; Ben Linders, "Scaling Infrastructure as Code at Challenger Bank N26," www.infoq.com, January 2, 2020; N26 Corporation, "The N26 History," n26.com, September 11, 2019; Jürgen Stüber, "Onlinebank Revolut greift mit Bitcoin-Handel N26 an," Gründerszene, December 7, 2019; Christian Gattringer, "Die Online Bank N26 ist mit Gratiskonten zum Milliardenwert geworden-bald kommt sie in die Schweiz," Neue Zürcher Zeitung, July 18, 2019; Valentin Stalf, Maximilian Tayenthal, "N26 startet in den USA!," n26.com, July 11, 2019; Jauernig Henning, "Phishing-Attacken und schlechter Service bei N26," Spiegel Online, March 28, 2019; Horst von Buttlar, "N26 wird gefeiert, die Deutsche Bank bedauert," Capital, January 12, 2019; OTS, "N26 gibt Finanzierungsrunde in Höhe von 300 Millionen US-Dollar bekannt," APA-OTS, January 10, 2019; Emilie Rauschütz, "Ein Meilenstein bei N26-500 Angestellte," N26 Magazine, mag.n26.com, October 16, 2018; Raj Saxena, "Tech at N26-The Bank in the Cloud," medium.com, May 22, 2018; Andreas Dörnfelder, "Seine Bank gewinnt gerade Kunden wie kaum eine zweite in Europa," orange.handelsblatt.com, March 20, 2018.

 

Advanced Database Management Questions:

Q1. List the business rules for the online banking business described above. You can make reasonable assumptions as long as you state them clearly in your answer.