Credit Suisse's $3.2 billion cut-price sale signals an ongoing crisis that could expose unicorn fintechs
, as well as crises relating to its relationships with hedge fund Archegos Capital and financial group Greensill Capital. Its delayed annual accounts showed it was around $8 billion in the red, and ultimately it fell after a collapse in investor confidence.. And that should have lessons for the shiny, fast-growing companies that want to be banks, and have only known an era of easy venture capital money and low interest rates.
"There's already a lot of soul searching about what fintech business models are," says Paul Rolles, an ex-Morgan Stanley managing director and cofounder of money-management service HyperJar.has been something of a darling of the startup world post-2008. The promise of technology-led businesses to shake up a staid, failed industry attracted huge amounts of investment. — face their first real questions about the viability of their business models.
A vigorous chase for customers during the low-interest rate boom years of the 2010s allowed fintechs to focus on growth without too much focus on profit. Recent developments might sharpen investors' minds, as they have elsewhere in the tech world. Rolles believes the banking issues of the past couple of weeks are as much about confidence as intrinsic issues.
"Back in 2008, the whole bank run was triggered off by US subprime mortgages but actually the amount of crap in the US subprime market wasn't that big," Rolles said."It was the fact that it triggered a lack of confidence and therefore a bank run."
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