N26

Matthias Fengler

Digital Transformation and technological advancements in a “Neo Bank” may sound like a contradiction to some.After all, isn’t the DNA of a disruptive fintech startup digital by default? How can a mobile bank not always be at the forefront of technological development?

Getting a banking license and beginning to operate with our own bank subsidiary, N26 Bank GmbH, in 2016 was an important starting point for us as a business. It was also a starting point of continuous improvement. Digital transformation has been an important part of this journey, especially in the field of accounting.

Offering a fully digital and easy to use banking app, complete with fully paperless onboarding and KYC clearly shows our digital DNA. Offering Apple Pay and Google Pay as one of the first banks in Europe to do so underlines being on top of technical developments in our industry. But on the flipside, just as traditional banks are, we are also required to be organized with a front office and back office due to banking regulations. With this, N26 has been on a journey in the last years to bring our back office operations and accounting systems to the level of sophistication and digitization of our main customer-facing product

In the beginning, our AP, AR and reimbursement processes were handled with paper (or pdf) invoices and reimbursement spreadsheets with all receipts attached, also payments and bank statement reconciliation was done manually - in an accounting process that did not necessarily match our digital-first DNA. The first part of digital transformation was to automate payments and bank statement reconciliation directly in our book keeping system.

"The achievements in automation of the posting processes enabled us to make high quality financial data available at any point in time"

In a phase of hyper growth, there was a clear need to get rid of any paper or pdf reimbursement. We implemented a cloud solution and successfully onboarded all our European employees to that tool in response. Interfaces from that tool to our “on premise” bookkeeping system, which was running on a virtual machine, were developed inhouse together with the vendor by the accounting team. As a next step we moved to “digital invoice only” with OCR text recognition and automated posting rules pasted on vendors and invoice numbers in our book keeping systems.

The next big step towards a full digital and efficient finance function was the groupwide implementation of new cloud-based ERP, which started with an HR module and soon the Financials module followed. With this, not only was N26’s banking business hosted entirely in the cloud, but also the Backoffice / finance function as well.

The achievements in automation of the posting processes enabled us to make high quality financial data available at any point in time.For N26, the next step in this journey is to make the most of the data with a clear focus on financial reporting. With more and more financial and also non-financial reporting obligations like ESG or thePillar3 reporting for banks, it is crucial to have a reporting framework in place that ensures timely preparation of consistent reports across multiple functions as the organization continues to scale. Automation is key to success not only to reduce the time taken to produce reports but also to comply with reporting standards like ESEF.

Overall, digital transformation and technological advancements in a “Neo Bank” is not a contradiction, it’s from my point of view, an essential and natural part of the development of a finance function in a startup from a“make it happen” mentality to a “best in class” function that can set the standard in our industry.