Whilst financial experts deny an impending financial crisis, customers are committing bank runs and losing faith in financial institutions via social media. The failure of Silicon Valley Bank and the takeover of Swiss giant Credit Suisse highlight how vulnerable today’s banking system is, whether experts agree or not. I recently spoke with German billionaire Michael Gastauer, the CEO of digital banking service Black Banx, on the possibility of a financial crisis and how people may secure their money if the worst transpires.
Black Banx is a fintech service offering real-time account openings to individuals and businesses in 180 different countries. A truly borderless platform, the company led by Gastauer is at the top of the industry, reporting over 20 million customers and revenue of $1.1bn as of last December. Fintech is transforming how businesses operate, and Black Banx is evidence of this. With an utterly remote approach, staff work from anywhere in line with Gastauer’s climate initiatives – trust is at the heart of all they do. As a result, it’s difficult to compete with the company’s international breadth and leadership.
On Friday, 10 March, Silicon Valley Bank fell foul to collapse after customers started drawing out large deposits. The run of SVB was triggered on Wednesday, 8 March, when it announced a $1.75bn capital raising. Fariborz Moshirian, professor at UNSW and director of the Institute of Global Finance, said, “Suddenly everyone became alarmed that the bank was short of capital,” leading customers to withdraw funds en masse. Due to Silicon Valley Bank being a prime choice for large money holders and tech startups, the bank collapsed two days after announcing a rise in capital.
How did you feel following the collapse of Silicon Valley Bank?
It’s always nerve-wracking being part of the financial world when something like this happens, but it’s not too surprising to me due to the changing landscape of banking into digitalisation. If anything, it assured me that creating a borderless crypto bank was the right choice. When banks collapse, especially in retail and business banking, customers can potentially lose a lot of funds.
Credit Suisse, Switzerland’s second-largest bank, had to be saved only a week after the collapse of Silicon Valley Bank, resulting in many turning to digital banking as an alternative to protect and manage their wealth remotely.
How can customers secure their funds with Black Banx?
A good solution is to buy cryptocurrency and hold it in cold wallets (also known as a hardware wallet) – enabling users to manage their crypto assets themselves. Providers like Black Banx can be used to convert FIAT money (money that the government guarantees as legal tender) into cryptocurrency so customers can store and withdraw it in cold wallets. Our take on crypto puts customers first. Many fintech companies do not let their clients take out their crypto assets, resulting in challenges if a firm is to go under such as FTX.
With Black Banx, customers can access their funds and withdraw at any point. We do this so individuals and businesses have security if a financial crash occurs.
Has the collapse of SVB and UBS’s takeover of Credit Suisse put a lack of faith in the traditional banking model?
I think it has. Following the SVB collapse, San Francisco-based startup Brex, which provides business accounts, reported an increase of 3,000 customers and extended loans to Silicon Valley Bank customers enabling them to meet payroll. Digital banking is gaining from the plummeting reputation of traditional banks.
Black Banx and digital banks alike are more convenient as customers can access and manage their funds 24/7 with a smartphone. With an increase in people working and living abroad, it makes sense why people are shunning physical branches. Digital financial institutions also tend to offer lower fees and higher rates. For example, at Black Banx, we offer great interest-bearing savings accounts in EUR, GBP, JPY and USD.
You said it’s nerve-wracking being in the financial business at uncertain times like these. What qualities does a CEO need to have to come out as a winner?
It’s essential to understand the gravity of the situation and to remain strong in your position. Being decisive and adaptable are the two most important qualities a successful leader must possess. Scenarios like this should be strategised beforehand, ensuring the business is prepared for any bumps along the way. This is especially important for startup companies that don’t yet have as much capital. Remaining confident in yourself and your employees is significant in pressurised situations.
Thank you for your time today Michael. Is there anything you’d like to share about Black Banx as a lasting statement?
We offer private individuals and businesses a truly global approach to banking. In our digital-only model, we strive to constantly improve upon what we have developed, redefining expectations, disrupting traditional practices and reinventing products and processes to ensure we remain at the cutting edge of the fintech revolution. As a result, Black Banx is a leading competitor in the fintech industry.
For more information on Black Banx, visit blackbanx.com