N26 has announced it will close the accounts of all its UK customers because of difficulties caused by Brexit.
The bank blamed the “timing and framework” of the government’s Withdrawal Agreement for the move, saying it made business impossible.
One of the smaller, so-called “challenger” banks - like Monzo and Starling Bank - N26 had aimed to take on the larger established banking sector by offering a more flexible and user-friendly way of managing money.
Thomas Grosse, chief banking officer at N26, said, "While we respect the political decision that has been taken, it means that N26 will be unable to serve our customers in the UK and will have to leave the market."
It is thought that around 200,000 UK customers will see their accounts closed.
What N26 customers need to do
N26 says customers should transfer their funds to different banks by 15 April 2020, when its UK accounts will stop functioning.
If any money is left in an account after that date, it will be moved into a holding account.
Customers would then need to contact the bank to retrieve their funds from the holding account.
Challenges for the challengers
N26 is the first challenger bank to close its UK operations because of Brexit, and others, like Monzo and Starling - which have UK banking licenses - have not indicated that they will follow suit.
The majority of the bank’s staff will be moved to other roles in the company, N26 said. It has a much larger operation in Germany, where it is based, and recently launched in the United States.
Challenger banks face a tough banking market in the UK, where more established banks like Barclays and Santander have reacted to their disruption by investing heavily in more user-friendly banking options, to avoid losing customers.
While Monzo and Starling can boast large numbers of customers, the banks still struggle because many of their users still hold their main transactional account with a traditional bank.