The continued emergence of new digital solutions has disrupted various industries. Among the spaces arguably being affected the most by steady innovation has been financial technology or fintech.

As such, traditional banks have had substantial competition in terms of leading the financial market, with customers becoming younger and more digitally savvy and, ultimately, preferring to manage their finances and make transactions online.

These digital changes have been substantially rapid, when looking back as little as half-a-decade ago, one wouldn’t think that the traditional banking system could be upended so quickly. Similarly, no one could have expected fintech to become an industry in itself and bring about neobanks.

The Rise of Neobanks

Two of the most common business models within fintech are digital banking and neo banking, with the difference between the two being the former is something of an alternative to traditional banking and offers similar services while neo banking solely operates online.

While the majority of other services and industries in general have gone digital, neobanks being only accessible online has so far limited its influence in finance as a whole. According to Fintech News Singapore, no more than 5 percent of the neobanks globally have turned a profit. Bloomberg experts, on the other hand, claim that they see neobanks funding decreasing, with competition from traditional banks possibly resulting in takeovers.

Still, according to a report by SkyQuest Technology Consulting, the global neobank market was valued at US$45.18 Billion in 2021 and is poised to continuing growing to as much as US$2168.31 billion by 2030, at a CAGR of 52.93% during 2023 to 2030.

Why Top Fintech Black Banx is Not Counting Itself as a Neobank

Established in 2014 by billionaire Michael Gastauer, the Black Banx Group was created as a means to unlock a borderless financial system for everyone where money can flow freely

Launched to the public in 2015, the group’s services have always been global in scope, as it offers private and business accounts to 180 countries in as many as 28 FIAT currencies and 2 crypto currencies.

Black Banx has had some of the most considerable success among fintechs in the last decade. In its first year, it had earned the patronage of as many as over 200,000 customers. By the end of the first quarter of this year, that customer base now stands at 45 million.

Despite the substantial success and Black Banx getting well past its initial target of reaching 30 million clients by end of 2023, the group refuses to count itself as one of the world’s fastest growing neobanks.

While Black Banx’s services are indeed digitally-based, the group has long recognized that limiting itself into the category of “neobank” is counterintuitive to its goal of offering the world a borderless financial system.

Limits of The Now Typical Neobank

Difficulty in scaling

Neobanks have fallen into a pattern of focusing on a specific niche market, such as millennials or Gen Z. By doing this, it can prove difficult for any other fintech to scale their business and reach a wider audience.

This is in direct contrast to Black Banx’s goal of easing international banking, and developing market-specific banking services and solutions for the different countries and segments it wants to reach.

Among the group’s overall goals is to promote financial inclusion, and address the 2.2

billion individuals without access to financial services. By not keeping to a niche market, Black Banx is able to innovate openly, and ultimately provide the unbanked with essential financial tools via fintech solutions and bridge the gap between them and traditional banking. This eventually leads to increased economic prospects, especially in areas with restricted banking access.

A crowded space

The immense growth of the neobank space continues to make it increasingly crowded, with new players entering the space all the time. This makes it unavoidable for fintechs to be lumped in together even if their services vary.

As a result, the focus shifts from innovation and developing solutions that address their target markets’ needs to competing on price and features with other neobanks.

So instead of blending into the neobank market, Black Banx chooses to maintain its focus on the continued development of innovative products and services that address the specific needs of each respective market they serve. This topped off with continuing to build strong relationships with their customers.

Differentiating itself from traditional neobanks has indeed been the most effective way to go for Black Banx, as it has been able to successfully avoid the increased but unnecessary competition, higher costs, and the overall limits that comes with the neobank market. By being able to focus on scaling their operations, the group is able to reach and serve a wider audience.