Charles Schwab Company, which specializes in providing brokerage services in the financial market, reports an active influx of new customers in March amid the crisis of the American banking system.
In the period from March 10 to March 16, the clients of this company deposited funds, the total amount of which is $ 16.5 billion. During the same period, resonant events occurred in the banking sector, which are the collapses of the Silicon Valley Bank and Signature Bank. The incidents caused panic based on fears that the negative trend will become widespread and affect the entire financial system.
Charles Schwab compares itself to a reliable port during a storm in the conditions of a crisis phenomenons. The company calls its main advantages a conservative balance sheet, a strong liquidity position, and a diversified base consisting of more than 34 million accounts. This is stated in the press release of the company. The firm also expressed confidence in its ability to help customers in any economic conditions.
The failure of SVB highlighted the importance of diversification. This opinion is shared by Drew Edwards, CEO of the payment company Ingo Money, which specializes in mobile payments. He also stated that the collapse of a financial institution was largely due to a highly concentrated base.
Experts believe that the most likely conclusion that representatives of the banking sector will make against the background of negative examples of major industry participants will be the application of the concept of dividing business between several financial institutions, regardless of their condition. Drew Edwards says that this tactic will be effective only if it is followed not only by banks but also by their partners while the distribution of funds.
The CEO of Ingo Money stated that he would not keep a billion dollars in one place and voiced his position on the unacceptability of single failures at any point in the value chain.
Treasury Chief Executive Chris Dean is of the same opinion. He says that excessive concentration of funds in one place is a risk and significantly increases the operational load.
Chris Dean noted that currently there is no bank in the United States that could change the usual concept of disposing of funds, but in general, the country’s financial system is capable of this. He also stated that regulatory authorities and financial institutions are united into a single entity.