In a key development for Germany’s digital bank N26, investors are reportedly seeking to remove the company’s founders from their roles as co-chief executives, following renewed criticism from the country’s financial regulator, BaFin.
The move comes as the fintech faces mounting pressure to address shortcomings in its risk management practices, which have drawn regulatory ire and raised concerns about the bank’s governance and operational stability.
N26, founded in 2013 by Valentin Stalf and Maximilian Tayenthal, has grown rapidly to become one of Europe’s leading digital banking platforms, offering mobile banking services and attracting millions of customers across multiple markets.
However, the company’s rise has been accompanied by challenges, particularly in meeting regulatory expectations.
BaFin, Germany’s financial watchdog, has repeatedly flagged deficiencies in N26’s risk management framework, with the latest critique prompting investors to question the leadership’s ability to steer the company through its next phase of growth.
According to sources familiar with the matter, as reported by the Financial Times, a group of N26’s investors is now actively working to replace Stalf and Tayenthal as co-CEOs.
The push reflects growing frustration among shareholders who believe that new leadership is essential to restore confidence in the bank’s ability to address regulatory concerns and maintain its competitive edge in the crowded fintech sector.
The investors’ concerns are compounded by the fact that BaFin’s criticisms are not new; the regulator has previously imposed growth restrictions on N26, including a cap on new customer onboarding, to ensure the bank strengthens its compliance and risk management systems.
BaFin’s latest findings highlight ongoing issues in areas such as anti-money laundering (AML) controls and internal governance, which are critical for a financial institution operating in a highly regulated environment.
These shortcomings have not only strained N26’s relationship with the regulator but also raised questions about the bank’s long-term sustainability, particularly as it competes with other digital banks like Revolut and traditional financial institutions expanding their digital offerings.
The regulatory pressure has also cast a shadow over N26’s ambitions to expand further in key markets, including the United States and other parts of Europe.
The call to replace the co-CEOs marks a pivotal moment for N26, which has been valued at over $9 billion in previous funding rounds, making it one of Europe’s most valuable fintech startups.
Investors, including prominent venture capital firms and institutional backers, have poured significant capital into the company, betting on its potential to disrupt traditional banking.
However, the repeated regulatory setbacks have sparked concerns about whether the current leadership can deliver on those expectations while navigating an increasingly complex regulatory landscape.
Stalf and Tayenthal, who have been at the helm since N26’s inception, have supported a vision of borderless, user-friendly banking.
Their leadership has driven the bank’s innovative product offerings and rapid customer growth.
Yet, critics argue that their focus on expansion may have come at the expense of building proper systems to meet regulatory standards.
The founders have not publicly commented on the reported investor push, and it remains unclear whether they will step down voluntarily or resist the pressure to relinquish their roles.
For N26, the outcome of this leadership challenge could have far-reaching implications.
A change at the top may signal a shift toward a more compliance-focused strategy, potentially reassuring regulators and investors alike.
However, it could also disrupt the company’s entrepreneurial culture, which has been a key driver of its success.
As the fintech sector continues to evolve, N26’s ability to balance product development with regulatory compliance will be critical to maintaining its position as a key player in digital banking.
The situation remains fluid, with no official confirmation from N26 or its investors regarding the leadership transition.
Nevertheless, the reported tensions underscore the growing pains faced by fintech professionals as they navigate the complexities of scaling in a highly regulated industry.