N26 logo against a turquoise background.

A step towards the future of savings with N26 - and growing your wealth even with low-interest rates

How can a bank protect its customer’s deposit from fees? Read on to learn more.

3 min read

It’s no secret that we are in a persistently low-interest environment today, with little signs of this changing in the near future. All banks, N26 included, are faced with the challenge of managing our customer deposits in a sustainable way. 

Like many others, N26 holds a significant portion of customer deposits with the European Central Bank. This is the safest place for us to store customers’ money - but comes at a cost of -0.5% negative interest. 

Our challenge as a bank has always been to find a transparent solution that is fair to our customers, rather than passed on in the form of multiple hidden fees. 

In general, there are a few ways to a bank to recover these costs:

  1. By expanding our credit business, where we would lend out customer deposits to other customers in the form of loans. We do this today with overdrafts and credits, and while this part of our business is growing, it is still significantly smaller than our customer deposits, which results in a liquidity surplus for us
  2. By investing our liquidity rather than holding it with the ECB, which entails higher risk. Here, we have a conservative strategy that bundles our funds on a European level to ensure risk is responsibly and sustainably managed.
  3. By looking at ways that N26 customers can make their money go further. With many of our customers saving more in recent months due to the COVID19 crisis, we’re looking at products that can help as they grow their savings with us

To do this, we’re working with a partner and a network of partner banks to offer a new feature that will allow customers to enjoy positive interest on their savings even in a low-interest rate environment. 

Our commitment to transparency and no hidden fees

From the beginning, we’ve always stood by our promise to be transparent and fair with all fees and costs, even as we expand and grow our platform to give customers even more opportunities to manage their finances better with us.

Instead of passing on the cost of holding customer deposits directly in the form of fees, we are approaching this by offering customers the ability to make an informed choice on their money. 

With this, we have announced to all new customers that we will be passing on the cost of the ECB -0.5% rate on all current account balances exceeding 50,000 €, which will help us ensure that we can operate both fairly, and sustainably as a business. Existing customers and N26 Metal customers will be exempt from this charge. 

Alongside it, we are working towards launching our first product in the savings space that will give you the opportunity to earn positive interest on money you set aside, while giving you the flexibility to access your funds anytime you need. Moving money from your main N26 current account to this savings account will take no more than a few taps for you to start making your money work harder for you. We will be introducing this new feature shortly in the German market, but plan to expand this to other markets as well. We already offer ways to set up savings rules for accounts and will continue to build on these savings options.

Stay tuned for more information on this exciting new feature and the partnership as we will announce more details soon! We are also working on a solution for stock and trading options - more information to follow.

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