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German neobank Nuri adopts a correctional course

The unique fintech that Nuri is, it is now on a restructuring course having impacted by sudden global happenings:

German neobank Nuri adopts a correctional course

Nuri is a German neobank that aimed to disrupt the banking industry by facilitating easy access to cryptocurrencies. It also handled bitcoin and offered a German bank account through an app. Formerly called Bitwala, the neobank integrates the access to the decentralized finance, or DeFi, domain that enables availing financial instruments without relying on intermediaries or banks by using smart contracts on a blockchain.

UNIQUE OFFER

Founded in 2015 by Jörg von Minckwitz, Jan Goslicki and Benjamin P. Jones, the neobank had successfully evolved a regulated neobanking model using a blend of digital assets/blockchain technology that facilitated growth of customers’ wealth. It had at one time 500,000 customers and emerged as an ideal combination of a European bank account with a Bitcoin wallet that allowed customers have an easy way of investing in Bitcoin. The neobank offered its Nuri IBAN, a personal integrated Bitcoin Savings Account. Using the account, a customer can transfer his euro between bank accounts, buy Bitcoin, transfer the Bitcoin to a hardware wallet or keep it safe on the Nuri platform. One can also schedule an automatic Bitcoin investment program and earn 3-5% annual extra Bitcoin through the saving account.

Residents of the EU and Switzerland can open the Bitcoin bank account, which is offered by the Berlin-based Solarisbank.

INSOLVENCY MOVE

While the model has been unique and well accepted by customers, Nuri has in a sudden move filed for insolvency in August 2022. It cited ‘significant macroeconomic headwinds and the cooling down of public and private capital markets’ that impacted its liquidity. It had by then laid off 20% of its staff. It also mentioned ‘challenging market developments’ and ‘crypto bear market’ that put a ‘lasting strain on the liquidity’ of its business resulting in the insolvency move.

The neobank, however, reassured its customers that the insolvency phase is temporary and all of its services, including withdrawals, would continue to be operational during the period as the customer funds are held in accounts operated by Solarisbank. And the app, products and services, it assured the customers, will continue to be available to them. It also said all the funds in the Nuri customer accounts are safe in view of the partnership with Solarisbank. It reiterated that the insolvency will help it take up a viable and long-term restructuring exercise.

In June 2022, Nuri had a Series B funding round of €24 million and the investors included Coparion, DIP Capital, Earlybird Venture Capital and Sony Financial Ventures.

CHALLENGING FOR THE ECOSYSTEM

The neobank has said 2022 has been challenging for the startup ecosystem as a whole, especially fintechs, with happenings like the pandemic, the turmoil in Ukraine, the cooling off of public and private capital markets and the unfavourable developments in the crypto space. Nuri is now part of a list of well-known startups that include Voyager Digital, Celsius and Three Arrows Capital to resort to insolvency.

UNIQUE SERVICES

Nuri has been offering its customers a Bitcoin and as optional an Ethereum wallet linked to a virtual bank account. Using the wallet, one can invest, send, receive, store and trade Bitcoin as well as Euros to crypto exchange and vice versa. Some of the interesting features of Nuri crypto investment include the ability to add and withdraw funds anytime (no lockup), weekly payouts every Monday, minimum investment of €10 in Bitcoin, no fees for investing or withdrawing (only network fees apply). There is also a new Bitcoin Savings Plan, which allows the customer to create a monthly savings plan for Bitcoin and/or Ethereum in the Nuri app and select the day and amount to fit one’s goals. Then, there is Nuri Visa, which is a prepaid credit card linked to the Nuri Euro bank account, which allows the customer to spend the Euros that is in his account. One can also spend Bitcoin after one trades Bitcoins for euros.

Then neobank also offers free integrated crypto tax reporting solutions to users through its partnership with CryptoTax.

SECURITY MEASURES

Nuri has several security measures to protect the cryptocurrency bank accounts. A customer will have a unique Bitcoin address and a private wallet, which is stored in the blockchain. It has multi-signature software wallets, biometric data and QR code technology.

What is notable in the safety features is that Nuri does not actually handle customers’ fiat and crypto funds. As part of the partnership agreement with Solarisbank and its crypto subsidiary Solaris Digital Assets, it is Solarisbank that handles these functions. Now, when it has filed for insolvency to tide over the liquidity issues, it is Solarisbank that will handle transaction related functions and it will be able to carry on its services while it undergoes restructuring.

It will be interesting to watch how Nuri, being unique and trendsetting and having faced operational hurdles, will come out of the insolvency and what strategy it would adopt in its restructuring plans. It would be a model for fintech startups as a whole to adopt.

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This article has been compiled based on publicly available information on the web, particularly the bank’s own website.

 

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