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SVB and Credit Suisse's Failures: Lessons for Financial Institutions in the Current Economic Climate

The global financial industry is no stranger to economic crises. And it has been on edge following the failures of Silicon Valley Bank (SVB) and Credit Suisse. The failures have raised concerns about the state of the current economic climate, particularly given the similarities to the 2008 financial crisis. The 2008 financial crisis caused widespread devastation, and the lessons learned from that experience continue to impact financial institutions’ policies today. 

This article analyzes the similarities and differences between the current economic climate and the 2008 financial crisis, providing insights into how financial institutions can avoid similar failures, and discusses the potential impact of SVB and Credit Suisse’s failures on the global financial industry.

SVB and Credit Suisse Failures

SVB and Credit Suisse Failures

Silicon Valley Bank (SVB) is a US-based financial institution that specializes in lending to technology startups. Fresh out of the oven is the collapse of the bank. SVB collapsed after inadequate diversification and a classic bank run, leaving the whole industry in shock. Before its descent, in 2021 also, SVB suffered a significant data breach that exposed sensitive information about its clients. The breach not only threatened the privacy and security of SVB’s clients but also raised questions about the bank’s risk management practices. 

Credit Suisse, a Swiss-based financial institution, has been the highlight of the past week. Credit Suisse was rescued from near bankruptcy last weekend by UBS, which is as good as a collapse. Suisse has faced significant losses due to its exposure to Archegos Capital, a family office that defaulted on margin calls. Losses are in billions of dollars, and the incident raised concerns about the bank’s risk management and compliance practices.

The failures of SVB & Credit Suisse demonstrate that even established financial institutions can make significant errors that could have far-reaching consequences. 

Economic Impact of SVB and Credit Suisse


Economic Impact of SVB and Credit Suisse

The failures of SVB and Credit Suisse have the potential to impact the global financial industry in several ways. 

First, there is concern that the failures could lead to a loss of confidence in the financial sector. This could cause investors to withdraw their funds from other financial institutions, leading to a broader financial crisis. 

Second, there is concern that the failures could lead to increased financial sector regulation. If governments and regulators perceive that the failures are indicative of broader problems in the industry, they may take steps to impose stricter regulations on financial institutions.

The impact of these failures is likely to be felt most strongly in the US and Europe. SVB’s failure, in particular, is a significant blow to the US fintech industry, which has been a key driver of innovation and growth in the financial sector. Additionally, Credit Suisse is one of the largest banks in Switzerland, and its failure could have significant knock-on effects on the Swiss economy.

Comparison of the Current Economic Situation with the 2008 Financial Crisis:


Comparison of the Current Economic Situation with the 2008 Financial Crisis

To understand how these failures relate to the 2008 financial crisis, it is necessary to examine the similarities and differences between the current economic climate and that of 2008.

One similarity between the two periods is the presence of asset bubbles. In the years leading up to the 2008 crisis, there was a significant increase in the value of housing and other assets, fueled by low-interest rates and lax lending practices. Similarly, in recent years, there has been a significant increase in the value of tech stocks and other assets, fueled by low-interest rates and easy access to capital. This increase in asset values could be a precursor to a potential bubble burst, similar to what occurred in 2008.

Another similarity between the two periods is the presence of excessive risk-taking by financial institutions. In the years leading up to the 2008 crisis, financial institutions engaged in risky practices such as subprime lending and excessive leverage. Similarly, in recent years, financial institutions have engaged in risky practices such as lending to unprofitable startups and engaging in high-risk trading activities. The failures of SVB and Credit Suisse illustrate the potential consequences of such risk-taking.

However, there are also significant differences between the current economic climate and that of 2008. One key difference is the response of governments and financial institutions to the crises. In 2008, governments and central banks worldwide implemented significant monetary and fiscal stimulus measures to prop up the economy. In contrast, in response to the COVID-19 pandemic, governments and central banks have implemented even more significant stimulus measures, including massive liquidity injections into financial markets. While these measures have helped stabilize the economy in the short term, they could also have significant long-term consequences, such as inflation and asset bubbles.

One key difference between the two crises is the cause. The 2008 financial crisis was caused by an overreliance on subprime mortgages, whereas the current economic climate resulted from a global pandemic. The pandemic has caused widespread job losses and reduced consumer spending, leading to a decline in economic activity. However, the pandemic has also led to an increase in demand for specific industries, such as technology and e-commerce.

Another difference is the impact on financial institutions. The 2008 crisis led to the failure of numerous banks and financial institutions, causing a domino effect that spread throughout the economy. In comparison, the current crisis has had a more uneven impact on financial institutions. Some institutions, such as investment banks and hedge funds, have performed well due to increased market volatility. However, other institutions, such as community banks and credit unions, have struggled due to the economic downturn.

One significant difference is that financial institutions today have more substantial capital and liquidity buffers than they did in 2008. This has enabled them to better withstand the economic shock caused by the pandemic. Additionally, many governments around the world have implemented fiscal and monetary policies to support their economies, which has helped mitigate the impact of the downturn on financial institutions.

Actionable Insights for Leading Financial Institutions to Protect Themselves & their Customers


Actionable Insights for Leading Financial Institutions to Protect Themselves 

In light of these risks, leading financial institutions need to take steps to protect themselves and their customers. Here are some recommendations for how they can do so:

  1. Strengthen Risk Management & Internal Controls- Financial institutions should ensure robust risk management and internal control frameworks are in place. This includes ensuring that they have adequate oversight and governance structures and effective risk assessment and monitoring processes.
  2. Invest in Diversified Portfolios- Financial institutions should diversify their portfolios to reduce their exposure to any particular sector or asset class. This can help to mitigate the impact of any potential losses.
  3. Invest in Technology & Innovation- Financial institutions should continue to invest in technology and innovation to improve their products and services and their risk management capabilities. This can help them stay competitive and better withstand any potential shocks to the industry.
  4. Collaborate with Regulators & other Stakeholders- Financial institutions should collaborate with regulators and other stakeholders to ensure that they are aware of any potential risks in the industry and are taking steps to address them. This can help build trust and confidence in the financial sector.

The Bottom Line


The failures of SVB and Credit Suisse are a stark reminder of the importance of strong risk management practices in the global financial industry. The similarities between the current economic situation and the 2008 financial crisis highlight the need for financial institutions to take proactive measures to protect themselves and their customers from similar failures in the future. By strengthening their risk management practices, increasing transparency, diversifying investments, and strengthening regulatory oversight, leading financial institutions can mitigate the risks of similar failures and ensure the long-term stability of the global financial system.

Frequently Asked Questions: 

  • What does Credit Suisse do in India?

Credit Suisse operates as an investment bank in India. It provides services such as investment banking, wealth management, and securities trading to clients. Credit Suisse has been present in India since 2008 and has offices in Mumbai, Pune, and Bangalore.

  • What caused the failures of Silicon Valley Bank (SVB) and Credit Suisse?

Causes of the failures of SVB and Credit Suisse:

SVB- inadequate diversification and a classic bank run, during which a large number of customers withdrew their deposits simultaneously.

Credit Suisse- The bank’s questionable acquisitions and repeated penalties had jeopardized its reputation, resulting in a significant decline in all its businesses.

  • What are some other examples of global financial failures?

The 2008 financial crisis is a prominent example of a global financial failure with significant economic consequences. Other examples include the collapse of Lehman Brothers in 2008, the 1997 Asian financial crisis, and the 2012 banking crisis in Cyprus.

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Ashish Verma

Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

Early Years

Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

Hanif Shaikh

Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

Early Years

Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

Divakar Choudhary

Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

Early Years

He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

In his words-

“What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!