Mobile bank N26's losses widen after ramping up spending on fraud controls
German mobile bank N26 reported Tuesday a sharp rise in annual revenues as usage of its platform grew, however losses also ticked higher after an increase in spending on regulatory compliance.
N26's net revenue increased 67% in the year ending Dec. 31, 2021, to 120.3 million euros ($116.8 million) as the bank benefited from growth in subscriptions, stronger customer engagement and higher interest rates. In 2020, N26 generated 72.1 million euros in revenue.
However, the $9 billion startup continued to lose money last year, with its net loss climbing 14% to 172.4 million euros. Of that sum, 28.2 million euros came from losses at N26's non-European Union operations, according to financials released by the company on Tuesday.
N26 has been refocusing its resources on core European markets after high-profile exits from the U.S. and U.K. The firm closed down its U.S. operations in January but is still active in Brazil. The Berlin-based startup previously withdrew from the U.K. in 2020, citing Brexit.
Last year, German financial watchdog BaFin imposed restrictions on N26's growth aimed at addressing «shortcomings in risk management with regard to IT and outsourcing management.»
The measures meant N26 could only onboard a maximum 50,000 new customers per month, far less than the 170,000 it was reported to have been signing up at the time. BaFin also appointed a special representative to oversee the implementation of the curbs.
N26 had trimmed its losses in 2020, to 150.7 million euros from 216.9 million euros. But after punitive action from regulators over alleged shortcomings in its prevention of money laundering, the startup ramped up spending on its internal compliance and fraud controls.
That contributed to a sizable
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