European smartphone-only bank Number26 has finally provided an explanation for its decision to cancel hundreds of customer accounts last week: users were making too many ATM withdrawals.
The German-based challenger caused uproar on social media last week after telling a host of customers that their accounts had been cancelled and would be closed within two months.
Much of the Twitter ire was fuelled by what customers claimed was a lack of communication - although the firm insisted that there was a reason for each closure it refused to comment on specific cases, citing data protection.
Stung by the "strong reactions" to the cancellations, Number26 has put out a statement promising to "inform our customers more transparently and proactively in the future".
Explaining the rash of account closures, the firm cites suspicious misuse and money laundering but also flags a more surprising reason: too many ATM withdrawals. A "number of customers" made around 15 cash withdrawals per month and sometimes up to 30. Number26 offers withdrawals for free but, in its home market of Germany, takes a hit of up to EUR2 each time a customer takes out some cash.
"We cover this fee with the assumption that most customers will use their accounts and this benefit, reasonably," says the statement.
Acknowledging its delicate business model, the startup adds: "We do have to recognise that we are not able to cater to all clients with our product, as this would mean that the vast majority of our customers would have to bear the significant cost burden of a very small minority. That’s why we issued the recent cancellations."