Will the SVB collapse hit neobanks?

Will the SVB collapse hit neobanks?

Orlando Crowcroft Orlando Crowcroft

Orlando Crowcroft

Content and journalism | ex-Sifted, Newsweek, LinkedIn in London, Shanghai, Dubai

Published Mar 16, 2023
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Silicon Valley Bank was the 16th largest bank in America when it went out of business last week, but in terms of global banking giants, it was more of a minnow than a big fish. In the wake of the crisis — which saw a mass exodus of deposits as startups and VCs feared the bank would go under — could founders, and customers in general, be less willing to use digital banks and fintechs and instead opt for big name legacy banks? After all, the latter are far better capitalised, and more likely to be bailed out. CNN reported on Thursday that legacy banks have already seen a spike in deposits. What could this mean for fintech in Europe more generally?


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  1. Perry Boyle 🇺🇸🇺🇦 commented on this

    View profile for James Bianco
    James Bianco

    President at Bianco Research LLC

    Banking effectively has two tiers. Tier 1: The "too big to fail" banks (JPM, C, WFC, BAC). Tier 2: All other banks. With a Tier 1 bank, you're a depositor. With a Tier 2 bank, you're an unsecured creditor. Seems like a lot of people have come to the same conclusion and don't like the idea of being an unsecured creditor with their life savings or their critical company working capital.

    Perry Boyle 🇺🇸🇺🇦

    Geopolitics 🌎 | Defense Tech 💣 | MITS Capital 🇺🇸🇺🇦

    That was true until Monday. Now all depositors at all banks, even branches of foreigh banks, appear to be fully guaranteed by the FDIC. This creates very perverse risk management incentives by bank managements, which I have addressed in other posts.

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  2. View profile for James Bianco
    James Bianco

    President at Bianco Research LLC

    Banking effectively has two tiers. Tier 1: The "too big to fail" banks (JPM, C, WFC, BAC). Tier 2: All other banks. With a Tier 1 bank, you're a depositor. With a Tier 2 bank, you're an unsecured creditor. Seems like a lot of people have come to the same conclusion and don't like the idea of being an unsecured creditor with their life savings or their critical company working capital.

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