Global adoption rates of digital banking have rapidly risen in the last half a decade. According to a recent report by Deloitte, an estimated 73% of users turn to online banking at least once a month, while 59% do so via mobile banking apps.
As populations become younger in average age and become more digitally savvy, financial technology is expected to be more prominent in use. As it keeps up with the ever-changing banking needs of the aforementioned population, it is also expected to become one of the richest industries by the end of the decade. According to Boston Consulting Group (BCG) and QED Investors, fintech is projected to become well worth over US$1.5 trillion by 2030.
The Rapid Growth Trajectory
At the forefront of this rapid growth trajectory are a number of digital banking institutions that have in one way or another been instrumental in making fintech the standard way to do banking. Few have done as much as Toronto-based Black Banx in terms of globalizing the space.
Established in 2014 by German billionaire Michael Gastauer and subsequently launched to the public in 2015, Black Banx’s growth has been considerably exceptional, given that it has only been in operation for less than a decade.
In its first year, it welcomed over 200,000 customers. By 2023, its onboarding numbers had ballooned substantially to an average of 1.8 million new customers per month. Throughout the first nine months of the year, the company welcomed over 11 million new customers, which brought the total number of Black Banx customers to over 33 million.
In the third quarter, Black Banx achieved a remarkable 72% year-on-year revenue growth, surpassing its initial target of 55% compound annual growth from 2022. The first half of 2023 also saw substantial growth of 47%. Through strategic hires, inefficient businesses, and increased private customers, the Wealth Management division garnered impressive net inflows of 9.8 billion USD in the first nine months of 2023, elevating the net private clients’ funds to 21.8 billion USD.
CEO Michael Gastauer said this had put the Black Banx Group on track for another record year. “In the first nine months of 2023, we have demonstrated good growth momentum across a diversified business portfolio, underlying earnings power, and balance sheet resilience. This puts us on a good track towards our 2023 financial targets. We are determined to continue on this path while accelerating the execution of our global customer acquisition strategy.”
Despite the substantial success, Black Banx continues to avoid the trappings of “growing too big, too fast.” Unlike other fintechs that experienced substantial booms 2-3 three years ago but then fell flat 12 months later, Gastauer and company continue to be mindful of the ultimate goal: unlock a borderless financial system for everyone where money can flow freely. While this requires that the group only work with a single key investor, it has, so far, also proven effective.
“Being able to keep a small board and having only one major shareholder helped us in the first few years when Black Banx was growing rapidly to make decisions fast, which is important for young companies. As the company grew and had more complex decisions to make, our board and corporate governance structure grew to the level that we are today. With a current Senior executive Team of 38 Board and Committee members, Black Banx has a rather complex corporate governance structure which is needed to fulfill all regulatory requirements and to operate a company of the size that Black Banx has become.”
Maintaining a modest team has proven cost-effective for Black Banx, with most of what would have been spent on redundant executive positions better spent on continued research and development geared towards providing more innovative solutions for customers and continued expansion in different markets. This also meant not taking the often-traveled path of relying on external funding like many fintechs have done.
“Being in a position where 3rd party funding was not a must to start and grow Black Banx, I realized that selling shares and losing equity at an early stage would become an expensive decision once Black Banx grows into a major market player.”
The success the company continues to earn has also proven helpful because it has allowed Black Banx to be self-funded.
“Since 2020, Black Banx has seen consistent growth in its revenues and profits. Despite a large portion of our revenue being reinvested to fund our growth, we have still been able to generate profits and grow our profit margin over the last few years.”
Embracing its digital roots, Black Banx maintains cost-effectiveness by maintaining a global team. While Black Banx employs over 4,000 employees as of mid-2023, everyone works remotely, effectively allowing the company to keep expenses and energy consumption at a minimum and soon reach its goal of a 95% reduction in office space use by 2025.
Conclusion
Evidently, while Black Banx may seem like any other fintech on the surface, its operations are one way it separates itself from the rest of the industry. As an organization that does not need third-party funding, it is able to avoid unnecessary spending and retain all of its revenue for future use. Operating almost exclusively via digital means can save on the resources typically spent on maintaining offices.
