In early 2022, Russia invaded Ukraine in an escalation of the Russo-Ukrainian War that originated in 2014. The invasion, which is considered the biggest attack on a European country since World War II, has devastated the latter while has also further isolated the former from the West and fueled economic insecurity around the world. Recently, an armed conflict broke out between Israel and Hamas.
Businesses—be it locally based or otherwise—are undoubtedly facing a difficult time in terms of operations in any of the aforementioned countries. Fortunately, banking has seemingly remained steady amidst the full-scale military conflicts. Despite the risks behind constant shelling, missile strikes, occupation of a part of the territory, customers are still able to obtain needed banking services, thanks largely to the continued digital advances in finance.
Digitalization on a Global Scale
In the last decade, and especially during the period of the pandemic, banks have significantly moved towards digital services. Due to the increased use of financial technology, customers have become increasingly accustomed to making most transactions without visiting physical bank branches.
The naturally immense competition in the financial sector continues to push for the constant development of technology, improving interface and introduction of new services. Among the key developments has been the globalization of banking, where customers can manage their finances and make transactions to and from anywhere in the world.
Among the leaders in the global digital banking space continues to be Toronto-based Black Banx which, since its launch in 2015, has offered private and business accounts in 28 FIAT and two crypto currencies across 180 countries. Through its borderless banking services, Black Banx continues to empower customers with the means to maintain their finances, support their businesses, and make any needed transactions, even if they are in the midst of or affected by the ongoing conflicts.
The reach and availability which Black Banx continues to offer has, in turn, helped make it one of the most preferred digital banks in the world. In the first three quarters of 2023 alone, it has earned over 11 million new customers, and continues to onboard over 1.8 million per month.
The global aspect of the Black Banx Group’s operations goes beyond the markets it serves. Keeping segregated accounts at the leading banks in various countries, the group is able to ensure that customers’ funds are globally diversified and protected by multiple jurisdictions. This method of never holding money in a singular bank or country has also allowed Black Banks to help overall banking remain stable, as funding is not put at risk by being in just one place.
Keeping Stability Through Confidence
There is seemingly an increasing understanding that cash or banknotes can be stolen during times of conflict or be damaged through natural instances like fire, etc. This has served as another reason why many continue to eventually lean on digital means to maintain their finances.
This recognition has not been merely limited to customers utilizing digital banking services, but also to the individuals constantly on the lookout for new investment vehicles. Granted, 2023 was far from a perfect year for finance given the crash of Silicon Valley Bank and drops in valuation of major fintechs such as Stripe and Revolut. However, the sustained growth of the likes of Black Banx and the outright need for continued banking services show that the finance sector continues to be one worth making sizable investments in.
Nubank, the largest neobank in Latin America, for instance, nearly doubled its revenue in the first quarter of 2023 to US$1.6 billion, up 87% year-over-year. This, a year after
Warren Buffet-owned company Berkshire Hathaway initiated a position in Nubank in early 2022, shortly after the neobank went public. More recently, Berkshire Hathaway has earned an estimated US$250 million from it investment in crypto currency-involved Nubank, despite Buffet himself publicly stating that “Cryptocurrencies basically have no value” and in effect proving that the finance industry is still worth the investment risk even amidst international uncertainty.
The digitalization of most financial services has also allowed for the continued collaboration of banks with other businesses such as those in retail, transportation, and even other banks. The ability to withdraw cash at the cash desks of stores, pharmacies, gas stations, and replenish accounts through self-service terminals has helped clients in markets affected by war to continue access financing services.
Collaborations between financial institutions, on the other hand, has helped in the maintenance of banking’s overall global stability, with revenue generated from working together has better ensured that the participating companies do not suffer the same fate as others that have been affected by the recent economy.
A prime example of this is Wise. This year alone, the UK-based foreign exchange financial technology company has partnered with other banks in an effort to provide customers with fast, secure and cost-effective solutions for sending and receiving money internationally.
First, it entered into an agreement with Saudi Awwalal Bank, one of the oldest financial institutions in the Kingdom of Saudi Arabia, to help the latter deliver more cross-border payment optionality to its customers. Next, Wise also entered into a partnership with Swift, a global provider of secure financial messaging services. The partnership is meant to enable payments sent securely through Swift to complete seamlessly over Wise with end-to-end transparency.
Partnerships like these and others will continue to enable the seamless, efficient and secure movement of value around a fragmented world and ultimately ensure banking’s stability despite economic instability brought about by regional conflict.