They are the most popular fintechs in Germany: the smartphone bank N26 and the Neobroker Trade Republic.

Both have millions of customers, are worth billions and are preparing to displace the top dogs.

N26 is currently worth around 8 billion euros, Commerzbank around 9 billion euros.

At first glance, the fintechs offer less than the established competition.

Why do so many people still choose them instead of relying on the tried and tested house banks?

Franz Nestler

Editor in Business.

  • Follow I follow

Neither N26 nor Trade Republic have reinvented banking, although they appear to have.

But that's not a problem.

Because many climbers who have grown up in recent years have only thought one process through to the end with their business model, not reinvented the wheel.

So there were search engines before Google, but the Californians delivered the best results.

Facebook wasn't the first social network either, but it was still the most attractive.

Banking rethought

Even Apple didn't invent computers or mobile phones, but transformed them from gray work devices into style icons suitable for everyday use through better handling and a fresh design.

Market success does not necessarily require a revolutionary product or business model.

You can outperform the competition by perfecting and digitizing the familiar.

This is where N26 and Trade Republic come in.

They see online banking not as an extension of the branch, but as something completely new.

You thought about the processes right from the start: What would banking look like today if it had only been made for mobile phones?

However, this approach also reveals a disadvantage: The fintechs deliberately only focus on a small, very specific target group: rather young and technically up-to-date and with correspondingly high demands.

You can see that in the apps too.

They are tidy and look modern - often much more modern than those of the established top dogs.

You don't have to go to a branch to open an account, you can do it directly on your cell phone.

Their business models are also strictly geared to the needs of the young audience. That is why they offer the basic functions for free. There is no order commission at Trade Republic, N26 offers the usual checking account functions free of charge. If you want more, surcharges are due. For younger people, this is the usual routine. Almost everything is free online before you have to pay for more features or less advertising.

The initially free N26 basic account includes the debit card and three free withdrawals per month.

The app has a practical statistics function that categorizes income and expenses and thus provides a good overview.

Finally, the transparent debit card looks cool.

But none of this is something that knocks every customer off their feet.

Overdraft facilities and the credit function also do not offer any added value, but rather meet standards.