Sorry to hear Darren, I know it sounds absurd. For me, an IBAN is an IBAN, so not sure what's going on there. I'm sure you've typed in the correct IBAN number (starts with 'DE' followed by 20-alphanumeric characters ... you could even try it without 'DE" and see what happens) and you have done enough Googling around to figure out how a typical German person could perform that simple DB transaction with their own bank account.
My challenge right now is I'm trying to recharge an Italian SIM card with my N26 account (either via the Mastercard, Maestrocard or a German Paypal linked to my N26 IBAN/Mastercard) and got authorization failure on all the above. Guess it's just something with the European banking system that isn't 100% seamless (and we Yanks take it for granted here!).
In any case, I'm really happy with N26 for other purpose, e.g. making Euro purchases locally from German websites, from sites like Vodafone, Amazon.de, etc etc. The real value I get is by having a German PayPal acct linked to my N26 (and therefore do not have to deal with IBAN etc).