Like most markets, the new normal has led to Europe’s digital banking landscape experiencing a paradigm shift of sorts. The current state of the local and global economy has presented challenges, solutions of which may lie in digital banking and the continued growth it continues to see.

Since the outbreak of the Covid-19 pandemic in 2020, people’s willingness to conduct business and operations digitally in the region has increased. According to the European Central Bank ECB, 43% of the supervised EU banks projects aim at customer experience enhancement, while 83% of banks aim to reduce costs mainly through IT legacy transformation.

From the customer standpoint, a survey done for ECB showed supervised traditional European banks reported to have almost half of their customers already appearing to have gone digital, with 36% using mobile banking and 21% using online banking for day-to-day operations. Another report showed the growth of the digital banking market to be accelerating, with over 160 neo-banks spread across Europe early this year.

Keeping Up with Costs

For a lot of 2023, Europe has been grappling with an escalating cost-of-living crisis, with inflation and geopolitical tensions adding fuel to the fire. Prices of essential goods continue to rise, effectively disrupting daily living and altering consumer behavior. Energy costs also remain on the rise, while geopolitical tensions are affecting the supply chain

These alarming trends have resulted in consumers being more cautious about their financial situation and adjusting their purchasing habits. According to a McKinsey survey, rising prices top the list of concerns for 58% of European consumers, above global issues like the conflict in Ukraine, climate change, and unemployment.

According to Gastauer, the challenges from rising costs also opens up opportunities for digital banks. “Like at the onset and peak of the pandemic, fintechs can fill a crucial gap by providing financial solutions that meet the present needs of customers, be it individuals and businesses.”

Gastauer’s company, Black Banx, for instance, had been key in helping customers with their payment and money transfer needs during the pandemic, making it easy to transact to and from anywhere in the midst of community quarantines and restricted travel.

“At this juncture, fintechs such as Black Banx help alleviate rising costs-of-living by providing financial management solutions that are comparatively less costly than those of traditional banks. When we make an effort to make these available as means of payment in everything they do, be it paying for groceries or fuel or sending remittances overseas, we help make it easy because it will cost less than if they did that via credit card or physically getting money from the atm.”

Financial services for an ever-large migrant population

Europe being host to a substantial number of migrants has been nothing new. In fact, according to the International Organization for Migration’s (IOM) Interactive World Migration Report 2022, the region hosted 87 million international migrants. Combined with Asia’s 86 million, this comprised 61% of the global international migrant stock.

Not surprisingly, the financial requirements of this ever-large migrant population continues to influence Europe’s digital banking landscape. Like the general population, Europe’s migrants are becoming increasingly younger. Youth often equals digital savviness and, as many of these migrants are regularly making banking transactions in and between their home and host countries, local digital banking simply won’t cut it.

“They require digital banking services that allow them to manage their finances from anywhere, and similarly make transactions to and from a variety of places.” Gastauer shares. “The millennial and gen z segments of these populations, like their local counterparts, are used to doing things digitally, so there is no reason that shouldn’t include international banking.”

While they can turn to traditional banks to send remittances, the challenge arises in the fact that many migrants lack the valid IDs needed to immediately open a bank account.

“Digital banks and fintechs like Black Banx are the ones who should continue to fill this gap by providing wallet-based solutions that meet migrants’ needs. We can enable digital payments and remittances and allow migrants to access financial services and receive government support for easier integration into their host countries.”

Undoubtedly, the European banking landscape continues to change along with societal and economic changes. 

By being mindful of such trends as increasing costs–of-living and the steady influx of migrants, financial service providers like that of Black Banx continue to be in a position of  being able to create innovative solutions that not only address current challenges but also seize new opportunities. 

“As the digital banking market in Europe evolves, the fintechs emerging at the forefront will be those that continue to adapt and align their services with these emerging trends, benefiting both themselves and their customers.”