Читать книгу Embedded Finance - Scarlett Sieber - Страница 15

The financial crisis of 2008 resulted from a cascade of causes within the banking industry and in society at large. Loose regulations led to irresponsible lending and borrowing, particularly in the mortgage sector, and then losses from failed loans led to catastrophe for consumers and financial institutions alike. Ivy League graduates formerly flocked to the large investment banks and the secure life they promised, but in 2008 this changed forever. The five largest investment banks at that time were Goldman Sachs, Merrill Lynch, Morgan Stanley, Bear Stearns, and Lehman Brothers. All five were severely compromised by toxic assets (mortgages in default) that were worse than worthless—they were negative equity.

Lehman Brothers went bankrupt in September of 2008, the largest bankruptcy filing in American history, and disappeared. Bear Stearns also failed and was bought for a fraction of its previous value by JP Morgan Chase. Merrill Lynch was similarly acquired by Bank of America. A week after Lehman's collapse, Goldman Sachs and Morgan Stanley announced they would become traditional banks offering deposit services to retail customers. American Express also became a bank around this time. This move afforded the banks more protections by bringing them under closer supervision from federal agencies, which was, for a brief period, an attractive prospect. Japan's MUFG Bank subsequently bought a considerable portion of Morgan Stanley, which also borrowed more than $100 billion from the federal government, more than any other financial institution. Goldman Sachs has since seen considerable success innovating on the retail model with its digital bank, Marcus, named for the company's founder, Marcus Goldman, and more recently with its newly launched transaction banking division and TxB platform, which already supports embedded finance use cases.

The financial crisis resulted in a significant tightening of consumer credit, with some banks pulling back entirely from lending to consumers and small businesses outside of established channels such as credit cards. Just because banks no longer wanted to lend didn't mean that the needs of consumers and small businesses changed. They still needed to borrow money, but the traditional providers were no longer available.