Discover top fintech news and events!
Subscribe to FinTech Weekly's newsletter
Read by executives at JP Morgan, Coinbase, Blackrock, Klarna and more
Investors prepare leadership shake-up at German digital bank amid mounting regulatory pressure
The leadership of N26, one of Europe’s most prominent digital banks, is under intense pressure from investors after Germany’s financial regulator, BaFin, once again faulted the lender’s internal risk controls. Plans are being discussed to remove the company’s co-founders from their executive roles, marking the most significant leadership crisis since the bank’s founding more than a decade ago.
Founders set to exit under investor plan
According to people familiar with the matter, co-founder and co-chief executive Valentin Stalf is expected to step down by September 1. His fellow founder and co-chief executive, Max Tayenthal, would follow by the end of the year. Both would also give up their special voting rights under the proposal now circulating among investors.
Supervisory board chair Marcus W. Mosen is expected to serve as interim co-CEO. Mosen, who joined the supervisory board as chair in 2024, previously held senior roles at Concardis, Ingenico, and Ogone. Any permanent successor will require regulatory approval.
The leadership changes are intended to stabilize N26 after years of scrutiny from BaFin, whose official role is to oversee banks, insurers, and financial markets to ensure stability and consumer protection.
BaFin audit highlights weak controls
The latest conflict with BaFin stems from a special audit of N26’s operations. According to the bank’s own disclosures, the review found weaknesses in internal controls, processes, and organizational structures. People briefed on the matter said the regulator is preparing formal warnings for at least two management board members and plans to appoint a special monitor to oversee remedial steps.
BaFin has a long history of intervening in N26’s operations. In 2021, it limited the bank’s customer intake to 50,000 per month after finding deficiencies in anti-money laundering controls. The cap, later raised to 60,000, remained in place until June 2024. The regulator has also imposed significant fines: €4.25 million in 2021 and €9.2 million in 2024 for delays in filing suspicious activity reports.
N26 has also faced temporary restrictions outside Germany. Regulators in Italy barred new customer onboarding in 2022 due to similar compliance concerns. The bank has since restored operations, but the episodes underscore a recurring struggle to meet supervisory expectations.
From fintech pioneer to regulatory target
Founded in Berlin in 2013 under the name Number26, N26 quickly grew into a leading player in European digital banking. It secured a banking license in 2016, raising its profile as one of the few fully licensed fintech challengers in the region.
The bank expanded internationally but later retreated from certain markets. It exited the UK in 2020, citing uncertainty linked to Brexit and regulatory demands. A year later, it left the United States, saying it would focus on its core European business.
Despite setbacks, N26 has attracted billions in investment and built a user base of millions. But its rapid growth has often been accompanied by questions over whether compliance systems could keep pace with expansion. BaFin’s repeated interventions have reinforced those concerns.
Investor tensions rise over funding round
The regulatory setbacks come at a delicate moment for the company’s shareholders. Earlier this year, N26 began a funding process aimed at financing the buyout of participants in its 2021 Series E round. Those investors had been promised an annualized return of about 25 percent.
According to people involved, the process has now been suspended following BaFin’s latest audit findings. Under the current proposal to restructure leadership, Stalf and Tayenthal would step aside in exchange for investors agreeing to lower their expected returns on the 2021 commitments.
The arrangement, still under negotiation, illustrates the complex balance between governance reform and investor expectations.
Interim leadership to steady the bank
Marcus W. Mosen, slated to become interim co-CEO, brings decades of experience in European payments and financial technology. His track record at firms such as Concardis and Ingenico has given him familiarity with regulatory requirements and cross-border payments infrastructure.
For N26, his temporary leadership is meant to reassure both investors and regulators while a permanent chief executive is identified. That search will require BaFin’s approval, underscoring the degree of influence the watchdog now holds over the bank’s future direction.
BaFin’s growing influence on German banking
BaFin, short for Bundesanstalt für Finanzdienstleistungsaufsicht, is Germany’s federal financial regulator. It oversees banks, insurance companies, and securities markets, ensuring compliance with anti-money laundering rules, risk management, and consumer protection standards.
The agency has become more assertive in recent years following criticism of its handling of earlier financial scandals, most notably the collapse of payments firm Wirecard in 2020. Since then, BaFin has applied stricter scrutiny to fast-growing fintech companies, including N26.
The regulator’s interventions in N26’s operations highlight the broader shift in Germany toward more aggressive supervision of digital banks, which are often perceived as innovating faster than they can implement effective compliance systems.
Strategic crossroads for N26
For N26, the coming months will be decisive. Investor confidence has been shaken, regulatory scrutiny remains intense, and leadership is set for a significant overhaul. At the same time, the bank’s customer base across Europe remains large, and demand for digital banking continues to grow.
The ability of N26 to resolve compliance concerns while delivering growth will determine whether it can retain its position among Europe’s leading digital banks. Its experience also illustrates the broader challenge for fintech firms: balancing rapid innovation with the strict regulatory demands of operating as a licensed financial institution.
As of now, investors and regulators alike appear determined to press for a new chapter at N26, one that will likely unfold without the founders who created it.
