Growth Wars: Driving N26 Growth

Lex Gillon
Frontira | Product Insights
4 min readJan 16, 2020


In our previous articles, we looked at Revolut, N26, and Monese’s growth rates as well as the drivers for Revolut’s growth. Now, we’ll take a look at N26’s growth drivers and introduce the VRIO tool. The questions?

  • What factors are driving N26 growth?
  • What role does N26’s Innovation Pace play in its growth?

Let’s jump right in.

Question 1: What factors are driving N26 growth?

To answer this question, we’ll be using the VRIO structure which Dr. Jay B. Barney discusses in his paper Looking Inside for Competitive Advantage. Why? The framework offers a rigorous, yet easy-to-remember, way of assessing whether a firm has the features for sustained competitive advantage, an advantage that will likely drive growth.

So, what’s VRIO anyway?

VRIO stands for Value, Rareness, Imitability, and Organization. Using these questions as a thought guide, VRIO allows you to assess whether your company is enjoying a sustained competitive advantage or temporary one.

What does this mean in real life? Let’s say you’re a digital bank and you decide to roll out a new feature. You’re certain this feature is the best thing since sliced oranges because you saw that a few other banks had it too. Wait, if every other bank has that feature is valuable, but every other bank has it, well, then it’s necessary feature, not a competitive advantage.

OK, let’s say that no one has this valuable feature: then you have a competitive advantage. That’s great! But, hold on a sec. Is this feature easy to copy? Is your organization structured in such a way that you can extract the full depth of the resource? Then this will be a short lived victory.

I know that was a quick explanation, so we’ll cover this more in depth in a later article.

N26 and VRIO

To evaluate N26 against VRIO, we first have to identify what N26’s key resources and capabilities are. The digital bank’s resources fall into three buckets: relational, technical, and promotional

  1. Relational resources: partnerships, company culture
  2. Technical resources: features, innovation
  3. Promotional resources: referral marketing, OOH ad campaigns

So, let’s flesh this out:

Verdict: Temporary Competitive Advantage

If we look at the three areas that meet the criteria for long term competitive advantage, then the three key resources are international partnerships, iteration speed, and international functionality.

N26 is creating immense value, but any individual capability could be reproduced with minimal cost to the competitor. However, where N26 competes is not on the size or complexity of any one of these features, but on how fast they roll out new innovations, expand their international presence, and continuously innovate on their core products.

In other words, N26 has three growth drivers that form an interconnected system.

Driver 1: Partnerships

For N26, partnerships serve two functions: to deepen ties in existing markets and to facilitate country expansion. Partnerships to deepen ties include connecting with Lime and to offer discounts to card holders, while partnerships to expand include linking with startups in different countries to grease entry into new markets.

Driver 2: Rapid Expansion

N26, launched in Germany, has now expanded to 24 markets total. Going back to the VRIO tool, the ‘O’ for organization is essential. The organization, according to the InsideN26 series on Medium, fosters a culture of independence, support, and innovation. Additionally, because the organization is small, it is nimble, and can respond quickly to new opportunities.

Question 2: What role does N26’s Innovation Pace play in its growth?

Driver 3: Innovation Pace

Spilling over into the next question, the third driver is N26’s speed of innovation. N26 launches 1.9 innovations per month on average. This speed means that even if their new innovation are imitable, by the time competitors copy them, N26 has already improved them or added another new feature, securing their lead.

Lessons for You:

  • Consider using the VRIO to assess your own company’s competitiveness. Are your advantages real? Is your company organized such that you can use your resources to their fullest potential?

In the next article we’ll breakdown Monese, with the following questions:

  • What is driving Monese’s continued growth?
  • What can we learn from the “expat” bank?



Lex Gillon
Frontira | Product Insights

Lex is CEO and Founder of Modality Group, a sex product market research and business intelligence firm.