N26 GmbH will discontinue its U.S. operations in the latest setback to the expansion plans for the German digital bank, which was recently valued at more than $9 billion.
The Berlin-based company will pull its offerings from the U.S. by Jan. 11 to prioritize expansion in Europe, it said in a statement on Thursday. The move will lead to it closing about 500,000 accounts, a spokeswoman for the bank said.
“We are sharpening our strategic focus on our core business in Europe for the time being,” Chief Growth Officer Alexander Weber said in a written statement to Bloomberg.
N26 wants to add more financial services in its home region, including investment products, the bank said. It’s also targeting expansion into additional countries in Eastern Europe and still plans to launch services in Brazil soon.
The U.S. move raises questions about the fintech firm’s ability to execute on its ambitious strategy. N26 exited the U.K. last year and faces regulatory headwinds in Germany, where it was told to improve its money-laundering controls.
The company was fined 4.25 million euros by Germany’s financial regulator in June because of delayed submissions of suspicious-activity reports. The watchdog also limited growth to 50,000 new customers a month to give the bank more time to work on its shortcomings.
The operational issues haven’t hampered investor backing for the company, which was founded in 2013. Last month, N26 raised money at a valuation on par with the market capitalization of Commerzbank AG, the country’s second-largest listed lender which traces its roots back to 1870.
N26, which has more than 7 million customers, entered the U.S. about two years ago. The firms backer’s include Third Point Ventures LP, Tencent Holdings Ltd., Allianz SE, Peter Thiel’s Valar Ventures and Li Ka-Shing’s Horizons Ventures.
U.S. customers will receive instructions on how to withdraw their funds, the bank said.
By Stephan Kahl (Bloomberg Mercury)