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Black Banx CEO Michael Gastauer says it’s time to turn to digital banking admist UK cost-of-living crisis

In the UK, a cost-of-living crisis has gripped the nation since the beginning of the year, and there’s no sign of it letting up. A recent ONS survey found that one in 20 young adults had run out of food in the last two weeks. As mortgage rates, groceries, and private rent continue to increase, wages have stagnated with many public sector roles going on strike as a means to fight the crisis. The think-tank Institute for Government defines the UK’s cost-of-living crisis as “the fall in real disposable incomes (that is, adjusted for inflation and after taxes and benefits) that the UK has experienced since late 2021.” Now, more than ever, the population is turning to financial services as a helping hand. 

By the numbers (from the Office for National Statistics)

Food and energy prices have been rapidly increasing over the past year, with gas prices taking a particular hit, likely due to the ongoing crisis in Ukraine. Recovery from the Covid-19 pandemic continues to put pressure on prices worldwide. Within the UK, “the price of consumer goods rose to their fastest rate in four decades in the year to October 2022.”

The average cost of a house in the UK in May was £286,000, which is £6,000 more than May 2022. More than 4 in every 10 adults (46%) have reported it was ‘very’ or ‘somewhat difficult’ to afford rent or mortgage payments. 

Pay continues to rise but fails to match inflation. Adjusted for inflation, pay growth fell by 1.2% compared to March – May last year. 

Michael Gastauer, leader of Toronto-based neobank Black Banx, has experience in all things finance. With an educated background and decades of work experience in the sector, Gastauer is one of the best in the industry when it comes to financial guidance. The German billionaire launched Black Banx – a borderless remote banking service – in 2015 with an initial 200,000 customers right off the bat. Since then, Gastauer and the Black Banx Group have amassed an astonishing 28 million customers and are onboarding at least 1.3 million more a month, as per their semi-annual report (June 2023). In an online exchange, Gastauer told us his thoughts on the UK’s financial situation, how digital banking can help, and more about his company Black Banx.

What do you know the UK’s financial situation to be like right now?

I know a lot of people are struggling with affording even the basics. I see through the media that a lot of the population is suffering due to inflation and this is having a knock on effect on all aspects of their lives, especially when a lot of jobs, mostly in the public sector are facing wage stagnation. 

It’s difficult when looking at any country struggling, especially one I have such secure ties with, that’s why I believe people should be looking at digital banking as a way to support themselves going forward. Even if people wish to keep their traditional bank account, they can do this too– digital banking typically has a wider range of products and services catered towards the customer. 

So you mentioned that digital banking can be an aid to those feeling the financial hit. What exactly can digital banking offer this demographic?

On a broader scale, when taking the whole economy into account, digital banking effectively limits the cash flow, [physical cash], circulating as digital payments take hold. As a result, this can have a knock on effect on inflation, lowering it in countries that are facing the high inflation squeeze. 

On a more personal level, digital banking allows customers to sort out their finances online, normally through a mobile phone, directly from the comfort of their own home. In a time where transport costs are high, this is enticing, as well as the privacy of being able to go over your bank statements yourself. Customers can gain financial advice, manage and track their funds, access to real time information and this collection of features leads to better decision making by the customer. 

Some companies also offer clients a range of credit card and loan options without having to visit a physical branch. This can be a potential lifeline for those needing emergency funds. Overall, the scope and help that digital banking can provide individuals in the UK is substantial. Being able to manage your wealth with the tap of a finger is extremely beneficial in times of financial crisis. 

And what about your company Black Banx? As a global fintech service you’re seeing consistently great numbers. Do you expect this to continue?

Black Banx continues to grow as we provide global services, with notable focus areas on populations that remain underserved in the financial industry. We offer accounts that can be set up almost instantaneously to individual, business and institutional clients from 180 countries, with the option of 28 FIAT and two cryptocurrencies. 

As of the first six months of 2023, we have managed to generate $US 1bn in revenue with an increased customer onboarding rate of 33% compared to December 2022. I see no signs of our growth stopping and believe Black Banx is prepared to reach its annual revenue forecast of US$1.9bn for 2023

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