Especially when compared to tech-happy Americans and nearly cashless Swedes, the Germans seem a bit behind in new banking technologies.
Hyperinflation in the 1920s still has its ripple effects in mistrust of credit today, with many Germans still preferring to pay in cash rather than plastic – though that is slowly changing.
So it's no wonder that banks have also been slow to adopt newer technologies for debit and credit card banking, often requiring heaps of paperwork to start an account or make any changes, as well as personal visits to the bank itself.
But Berlin-based startup Number26 is trying to change the traditional brick-and-mortar establishment of German banks. Their smartphone-based banking system allows users to track account activity in real-time – instead of waiting days for transactions to show up – without filling out forms or stepping into an actual bank.
“Our customers only get one letter, and that's the credit card,” a Number26 spokeswoman told The Local.
“With the technology we have now it can be done, so why shouldn’t it be?”
Number26 says it wants to offer a more convenient option in European countries where the technology and infrastructures can be outdated and often frustrating for customers.
“These are all countries with rather bad banking experiences,” a company spokeswoman told The Local. “They are still working on old technology and the banks have large, inefficient infrastructures where certain features just aren’t available.”
Users can sign up for an account within eight minutes, using a video chat function to verify their identity.
“A Spanish citizen can open a German bank account and they don't have to travel here to do it,” the spokeswoman said.
Transactions show up in the app as soon as they are made and cards can be blocked or unblocked by the user on their phone. Clients' money is protected by the German Deposit Protection Fund.
In Germany, the startup also offers the feature of having an overdraft limit: users can go 'in the red' up to a certain amount and then can track how much they owe in interest in real time.
Breaking down banking barriers in Germany
Number26 launched in January of this year for Android, iOS and desktop and has more than 80,000 clients throughout Germany and Austria.
Number26 has been compared to the American apps Moven and Simple, which also allow users to track transactions on their phones in real time and target mainly millennials.
The Berlin startup's relative novelty in the European market gives it somewhat of an edge, though big banks have been in the game much longer.
“It's a scary market because it's highly regulated and you have some big players in there,” said the Number26 spokeswoman, referring to long-established European banks.
Nevertheless, “in the end the users are going to decide which one is the better product.”