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It feels like the news about the new ChatGPT is everywhere on every feed of every single social media platform. And just when we got used to being bombarded by news pieces revolving around AI and ChatGPT, we’ve been struck by a banking crisis.
The international banking sector has long been a cornerstone of the global economy. It facilitates the flow of capital and credit to individuals and businesses. Clearly, when something bad happens to this sector, businesses everywhere feel the consequences.
This is especially important to keep in mind when there are banks such as SVB and Credit Suisse that used to be considered rock-solid and are now facing a complete meltdown.
What might this bring to you and your business? Should you rethink your marketing budget?
Let’s take a better look at this issue and try to figure out the answer to this question.
How A Banking Crisis Affects Marketing
A banking crisis such as the one we are facing today can have a significant impact on businesses' marketing efforts, particularly in the eCommerce and SaaS niches. One of the primary ways this can happen is through a tightening of credit markets.
During a banking crisis, banks may become hesitant to extend credit to businesses, particularly those in industries that are seen as riskier. This can make it harder for eCommerce and SaaS companies to secure the funding they need to invest in marketing efforts such as advertising, hiring marketing staff, and developing new campaigns.
Furthermore, a banking crisis can lead to a general tightening of consumer spending as people become anxious due to the economic climate.
This can make it harder for eCommerce and SaaS companies to reach their sales targets as consumers may be less willing to spend money on non-essential products or services. But, even during dire times, it is well worth investing in the services of marketing and growth companies and agencies that can deliver what they promise.
Keep that in mind should you start considering whether it’s better to tighten the belt or keep pushing with your marketing efforts no matter the industry you’re in.
Why The B2B Sphere Should Care
A potential crisis of this kind could affect the B2B sphere too. The way this can happen is that supply chains get disrupted.
During a banking crisis, companies often become hesitant to extend credit to their suppliers or partners. This can cause delays or disruptions to the supply chain.
But, how does this affect B2B businesses?
Well, this can impact various business segments such as logistics, manufacturing, and order fulfillment in general. It’s also worth noting that a crisis of this kind can also lead to a tightening of credit markets. B2B companies often rely on credit to support their operations.
It’s worth noting again that during a banking crisis, credit markets can become tighter, making it difficult for companies to access the funding they need to keep things running smoothly.
What Caused This Banking Tsunami?
US regulators attempted to reestablish trust by guaranteeing deposits at SVB and crypto-focused Signature Bank, but the recent failure of Credit Suisse reignited concerns about financial sector contagion.
Credit Suisse is a massive financial institution that is regarded as critical to the global economy. SVB, on the other hand, is a mid-tier bank with significantly less capital.
Despite the fact that Credit Suisse has been dealing with financial health issues for years, its sale to UBS on Sunday harmed Switzerland's image as a financial stability haven, causing financial market volatility.
Several regional US banks, including First Republic, have been under pressure as well, and their stock prices have dropped.
Concerns have also been raised about Credit Suisse's takeover because Swiss authorities have reduced 16 billion Swiss francs in bonds to zero, with shareholders allowed to keep 3 billion francs.
This reversal of debt recovery norms has enraged investors, who have lost all of their investments, and has increased the likelihood of legal action.
We are now only left with speculations and predictions of how things will unfold from here. There is no doubt that many are anxious and concerned. Especially the big-name investors that have a lot at stake here.
Authorities Are Preparing To Step In And Assist
Following several bank rescues, there are indications that authorities are planning additional actions to restore confidence in the banking sector. After all, this is not something we haven’t already seen when it comes to banking fallouts.
According to Bloomberg News, US financial regulators are considering temporarily guaranteeing all bank deposits, which are currently only protected up to $250,000. This action follows similar actions taken earlier this month to guarantee all deposits at SVB and Signature banks.
Extending protections to all deposits, on the other hand, raises concerns about moral problems, as it may encourage investors or depositors to take on even more risk.
Longer term, Democrats, including US President Joe Biden, have proposed tightening bank oversight and restoring key Dodd-Frank reforms, such as the $50 billion threshold for "too big to fail" banks.
Republicans, on the other hand, may object. Having a unified approach in the parliament is a problem and it doesn’t just apply to this stance but to many other issues the US is struggling with at the moment.
Final Words
Yes, the problems at SVB and Credit Suisse have raised concerns about the stability of the banking system, but most economists and experts believe that a global banking crisis is unlikely.
And, this is certainly a good signal for everyone.
However, this doesn’t mean that you shouldn’t keep in mind the possibility of a turbulent period. This is important because you need to keep your company in mind and prepare it for whatever might happen.
Should you feel the effects of this crisis, don’t rush to cut your expenses. Re-evaluate what brings in the revenue and how marketing in particular helps with that.
