The Effects of Economic Downturn on the Fintech Industry and Black Banx

Economic Downturn on the Fintech Industry and Black Banx

The financial services space has rapidly developed, diversified, and become more competitive in the last decade as digital technologies upend traditional business models. Today we discover how digital banking service, Black Banx remains on top no matter the economic climate.

For the rest of 2023, change is set to continue, although not all trends are looking upward thanks to a looming economic downturn that may actually already be present.

The effects of the decline in economic activity is evident across all industries, but arguably none more so than the finance industry, which has taken the brunt of the crisis as of late:

  • Silicon Valley Bank (SVB) in San Francisco saw its stocks plummet by 60%.

This led to a bank run where startups and venture capitalists withdrew their money en masse amid fears over its financial health and eventually led to SVB filing for bankruptcy.

  • Despite raising $800 million at a $33 billion valuation in mid-2021, Revolut, a British neobank and financial technology company that offers banking services, saw its valuation cut by 46% by a UK trust run by the asset manager Schroders.

This was the second cut to Revolut’s valuation by a top investor in recent months, with US-based investor TriplePoint having estimated that its stake in Revolut had lost about 15% of its worth, dropping from $10.1m to $8.6m, according to reports.

  • According to Dealroom—a global provider of data and intelligence on startups and tech ecosystems—fintech startups raised $13.4 billion worth of funding globally in Q3 2022.

This is 40% less than the prior quarter, as well as down 64% from the all-time-high in Q4 2021.

In terms of venture capital funding, fintech was also the third worst performer, with a 62% fall year-over-year.

  • As per the Fintech Times, over 4,000 fintech employees lost their roles across 45 companies in the first half of 2022, highlighting the impact the downturn has had on the finance industry.

Half of all fintech firms have also reportedly had to pause their hiring of new staff in 2023.

In adversity is opportunity

It is evident that finance, and the global economy in general, is set for a period of uncertainty. As a result, it is understandable that while new banking services and solutions backed by new technologies may continue to emerge, most financial institutions will likely operate conservatively for the foreseeable future.

It is not all gloom and doom however, as challenging times have almost always proven to also be times of opportunity. In this case, the fintech industry being what can possibly help turn the economy around.

According to a report by Facts & Factor, the size of the digital banking market is projected to surpass $10.3 trillion by 2028.

With a continually growing tech-savvy audience looking to be served by technological advancements, leaders in the fintech industry can promote economic growth by expanding financial opportunities and satisfying the needs of the large population of digital-natives that are increasingly doing more banking.

Fintech can also benefit other businesses by enhancing payment methods and customer relationship management, as well as advance financial inclusion and broadening services across all industries and ultimately drive economic activity.

This particular opportunity to be significantly impactful to the global economy is what has driven borderless banking services provider Black Banx to maintain its trajectory.

Jumping in the driver seat

Launched in 2015, the London-based digital banking platform continues to grow its international network spanning 180 countries and territories in both established and emerging markets to better connect people and businesses around the world with optimal ease, be it via smartphones or online.

Unlike other fintech startups who have been affected by the economic downturn and have faced challenges in obtaining funding, Black Banx is able to continue with its development of both FIAT currency and crypto currency banking services and solutions, as it is mainly funded by the Gastauer Family Office (GFO)—a single family office with €10 billion assets under management and a venture arm investing in fintech companies.

Unlike other financial institutions that can be prone to a bank run, Black Banx stands steady in the midst of the financial crisis. As of 2022, the company has earned $1.1 billion worth of revenue.

Developing and maintaining strong relationships with the leading banks globally, Black Banx is also able to segregate customer accounts across multiple locations. By never holding funds in one singular bank or country, the highest level of protection is provided as customers’ finances are globally diversified and enjoy the security of multiple jurisdictions.

While sustained success and revenue like Black Banx’s would have other institutions moving conservatively to avoid experiencing a deficit during the present economic downturn, Black Banx continues to take a different approach, instead leveraging its growing resources to ensure retail and business customers are able to make the most their finances and thrive during a challenging period.


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