The SVB Collapse Caused Major Turbulence In Traditional Banking – Is FinTech Here to the Rescue?

Published on

The recent collapse of the Silicon Valley Bank has unraveled endless horror stories for the financial industry. The traditional banking sector felt the hardest impact of the crash, causing rousing questions about their stability and fund safety.

As customers become more vigilant, the interest in alternative banking begins to spike, including fintech solutions, which offer more secure and innovative options for money management.

Turbulence In Traditional Banking

Indeed, other traditional banks have seen rising deposit withdrawals after the SVB incident. In fact, banks like Western Alliance Bank (“WAB”) and Pacific Western Bank (“PWB”) have already seen rising mass deposit withdrawals following the SVB horror stories.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 2022 hedge fund letters, conferences and more


On a larger scale, several venture capital funds have advised their portfolio companies to withdraw their funds from the bank. Major players in the venture capital industry, including Founders Fund, Union Square Ventures, and Coatue Management, have expressed concern that their portfolio companies could be caught up in the potential failure of the bank.

As a result, they have recommended that their portfolio companies move their funds to alternative banking solutions that offer more stability and security. This highlights the growing importance of fintech and alternative banking solutions in the eyes of venture capital investors and their portfolio companies.

Fintechs To The Rescue

As traditional banking strikes a hard hit, fintech companies begin commencing solutions to fill this void that poses long-term financial consequences among employees.

In the wake of the SVB collapse, we are seeing more solutions like what Equitybee has done with Equity Value Finder, or how other fintech companies are offering new tools to help customers navigate this challenging time.

For example, some companies like Wealthfront are offering virtual financial coaching sessions to provide guidance on budgeting and saving, while others are introducing new mobile apps that allow for seamless investment management.

The rise of cryptocurrency is also creating new opportunities for alternative banking solutions that offer increased transparency and security. As customers continue to seek more diversified and flexible financial options, fintech companies will play a pivotal role in shaping the future of the industry.

On a grander scale, customers are now increasingly skeptical of keeping all their money in one place. This is where crypto comes in: offering alternative banking solutions could see a spike in business.

Crypto On The Rise... Again?

The crypto industry is worth approximately $1 trillion and countries worldwide are starting to regulate it. These countries understand the potential of crypto and are embracing it by establishing comprehensive regulatory frameworks.

The regulatory frameworks established by several jurisdictions, including the European Union, Hong Kong, Singapore, and Australia, provide stability critical to maintaining a robust banking and financial system. These frameworks also recognize the distinctive features of blockchain technology and crypto by adopting new rules that cater to them.

This presents an opportunity for crypto service companies to demonstrate their efficacy as a hedge against risks in traditional finance. Coinbase Global Inc., a publicly traded cryptocurrency exchange platform, has already witnessed a consistent increase in crypto assets such as XRP, BNB, SHIBA INU, Monero, among others, displaying exceptional trajectory in the sector.


The Symbiotic Relationship Between The US Dollar And Crypto

Coinbase Global Inc (NASDAQ:COIN) is a key player for global customers to venture into the crypto arena. With 110 million verified users and more than 245,000 ecosystem partners, the crypto exchange platform is underway in providing a secure, easy, and accessible way to invest, spend, save, and earn.

And while the US dollar still continues to be a global force, crypto is an unsung catalyst in making it stronger. The recent action by the Federal Reserve and 5 other central banks to optimize availability of US dollar swap lines solidifies its position as the world’s reserve currency. The use of crypto further reinforces this position.

With Coinbase seeing a supreme rise, the surge of decentralized finance platforms that leverage blockchain technology is expected to catapult. This trend could provide accessible, secure, and transparent financial services on a global scale. Unlike traditional banks, these platforms are free from autonomous control, making them relatively bulletproof against breakdowns.