Financial technology is easily the fastest growing industry in the world, with the space projected to be worth an estimated US$882.30 billion by 2030. With that, it is not surprising that new fintech continues to emerge in the market, with aspiring digital banks bringing on innovations that they hope will net them a substantial share of the proverbial fintech pie.
To date, there are over 26,000 fintech startups worldwide, effectively making it a consumers’ market with so many options to choose from. With that said, there are more failures than successes, with the fintech startup failure rate for venture capital-backed businesses at 75%.
Because of this, it is vital for consumers to know which companies they can rely on for the long term. Among the most seemingly bankable as of late has been Revolut, which was able to net a perfect score of 100 and topped PYMNT’s Provider Rankings of Digital Banking.
Expectedly, Revolut continues to gain more clientele, which at mid-2023 was at 30 million as per media reports. With that, other fintechs seem to have their work cut out for them in terms of competing with the UK-based digital bank. A blueprint they may want to consider? That of Black Banx.
The Toronto-based global digital banking company founded and helmed by German billionaire Michael Gastauer has enjoyed a rapid growth trajectory in the last decade and, while not having as much fanfare as Revolut, has also managed to earn the patronage of over 30 million customers of its own.
The Meteoric Rise of Black Banx
Founded in 2014 and subsequently launched to the market a year later, Black Banx emerged from a vision to simplify cross-border banking and international wire transfers. What started as a project named WB21 quickly evolved into Black Banx, a name now synonymous with innovation in digital banking. By the end of 2018, Black Banx had reached a valuation of US$9.8 billion, a testament to its rapid growth and the appeal of its services.
Gastauer’s previous ventures and substantial investment of US$380 million through his Family Office between 2014 and 2018 played a crucial role in this growth. The company’s expansion into cryptocurrency trading in 2018, offering BTC and ETH, further diversified its services and appealed to a broader market.
Revolut’s Journey to the Forefront of Fintech
Revolut, on the other hand, has been a formidable player in the fintech space. With a perfect score in the PYMNTS Provider Rankings of Digital Banking, Revolut has established itself as a leader in the industry, offering a range of financial services that resonate with a global audience. Revolut’s journey has been marked by strategic expansions and a focus on user-friendly financial solutions.
Its ability to adapt to changing market demands and customer preferences has been key to its success. The company’s emphasis on a seamless user experience, combined with a diverse range of financial services, has helped it maintain a strong position in the competitive digital banking landscape. Revolut’s approach to international expansion, though different from Black Banx’s, has been equally effective in capturing a significant share of the global market.
Customer Acquisition: A Worldwide Strategy From the Beginning
Black Banx’s strategy for customer acquisition hinges on global expansion. By entering markets like China and Japan and establishing offices in regions such as Singapore, Brazil, India, Russia, UAE, and South Africa, Black Banx has tapped into a diverse customer base.
This approach contrasts with Revolut’s more focused expansion, yet both strategies have proven effective in their contexts. Black Banx’s entry into China in 2020, despite the challenges of the Covid-19 pandemic, and its subsequent expansion into Japan, are prime examples of its aggressive growth strategy. This global footprint has not only increased its customer base but also enhanced its brand visibility and reputation worldwide.
Black Banx offers accounts in 28 FIAT and two cryptocurrencies, catering to both private and business clients from 180 countries. This wide range of services, including multi-currency debit card options and real-time currency exchange, positions Black Banx as a versatile player in the market.
Revolut, while also offering diverse services, has been noted for its fee structure, which includes charges for some premium services. Black Banx’s ability to provide instant account opening and global real-time fund transfers has set a new standard in the industry, making it an attractive option for customers seeking efficient and innovative banking solutions.
A key aspect of Black Banx’s acquisition strategy is its commitment to financial inclusion. By offering easy sign-up processes and catering to clients often overlooked by traditional banking, Black Banx has opened doors to millions who were previously unbanked.
This approach not only expands its customer base but also aligns with the company’s mission to bridge the gap between traditional banking and the unbanked population, especially in regions with limited banking access. Black Banx’s focus on providing digital banking services in West Africa, through its subsidiary in Monrovia, Liberia, further emphasizes its dedication to financial inclusion.
Retention: Keeping Customers Engaged
A Customer-Centric Approach
Black Banx focuses on providing smooth digital experiences and personalized financial solutions. This customer-centric mindset is evident in their continuous investment in technology to enhance user experience. The company’s emphasis on ensuring every interaction with their brand is exceptional has been a key factor in maintaining high customer satisfaction and loyalty. Black Banx’s strategy of offering unrestricted payouts to third parties and crypto withdrawals to external wallets caters to the modern customer’s need for flexibility and control over their finances.
Both Black Banx and Revolut understand the importance of evolving with customer needs. Black Banx’s expansion of services to include things like batch upload or API for bulk payments for business customers shows a keen awareness of the diverse needs of their clientele. The introduction of interest-bearing savings accounts in multiple major currencies and the provision of real-time currency exchange and crypto trading services are examples of how Black Banx continuously adapts its offerings to meet the changing demands of its customers.
Security and Trust
In an era where data breaches are common, Black Banx has invested heavily in security tools and a global diversification concept to protect customer funds. This commitment to security builds trust and loyalty among its users. The company’s focus on protecting customer funds with industry-leading security tools and its global diversification concept not only ensures the safety of customer assets but also reinforces the trust customers place in Black Banx as a reliable financial partner.
The Financials: A Reflection of Strategy Success
Black Banx’s financial performance speaks volumes about the effectiveness of its strategies. In 2023, the company reported a staggering US$2.3 billion in revenue and a pre-tax profit of US$289 million. This represents a 109% year-on-year increase in revenue and a 62% increase in pre-tax profit. Such figures not only underscore the company’s successful expansion but also its ability to attract and retain a growing customer base. The increase in the number of SME clients, particularly in the MEA region, and the consistent growth in revenues and profits since 2020, highlight Black Banx’s successful approach to both market expansion and financial management.
While Revolut’s exact financials in comparison aren’t detailed here, its perfect score in the digital banking rankings and its global presence indicate a strong performance in customer acquisition and retention as well. Revolut’s ability to net a perfect score reflects its excellence in various scoring factors such as channel coverage, app usage data, and customer satisfaction. This achievement not only positions Revolut as a top player in the digital banking sector but also showcases its commitment to providing high-quality services that resonate with its customers.
In Sum: What Sets Them Apart?
- Business Model and Funding: Black Banx’s single-shareholder model has given it a unique agility and freedom in decision-making, while Revolut’s more traditional investor-driven approach has necessitated a focus on profitability and scaling.
- Customer Inclusivity vs. Service Diversity: Black Banx’s strategy hinges on financial inclusion, making banking accessible to the unbanked. Revolut, on the other hand, has focused on diversifying its offerings, catering to a broad spectrum of financial needs.
- Market Approach: While Black Banx has prioritized rapid expansion and reaching underserved markets, Revolut has concentrated on deepening its presence in existing markets and enhancing its service portfolio.
- Risk and Innovation: Black Banx’s single-shareholder structure has allowed it to take bold risks in innovation, whereas Revolut’s approach is more measured, balancing innovation with investor expectations.
- Focus on Unbanked Populations: Black Banx’s emphasis on serving the unbanked and underbanked populations, especially in regions like Africa and Asia, highlights its commitment to financial inclusion beyond mere profitability.
- Adaptability in a Changing World:Both companies have shown remarkable adaptability during global challenges like the Covid-19 pandemic, with Black Banx making significant strides in China and Revolut continuously refining its digital offerings.
In the race to dominate the fintech landscape, Black Banx and Revolut have adopted distinct paths. Black Banx’s journey, fueled by a unique funding model and a commitment to inclusivity, contrasts with Revolut’s technology-driven, service-diverse approach. Both strategies have their merits, reflecting the diverse needs of the global financial market. As they continue to evolve, one thing is certain: the fintech world will be watching, learning, and perhaps even emulating their innovative approaches to customer acquisition and retention.