Will there be a financial collapse in 2023, and can affiliates still earn high commissions?
Financial affiliates and Forex traders are closely following news reports about an emerging global banking crisis. Online traders are worried by analysis and opinion pieces suggesting that a global recession or a 2008-style financial crisis is imminent.
This blog post gives you a quick and clear overview of the recent bank failures and analyzes the prospects for online brokers and financial affiliates as 2023 unfolds. Although the headlines are definitely shocking, the news isn’t all bad. There are still plenty of opportunities to earn high commissions as a broker affiliate this year. We’ll explain how.
Bank Collapses in March 2023
The sudden collapse of the Silicon Valley Bank (SVB) on the 10th of March 2023 sent a shockwave through the banking system and the financial world. The unexpected failure of a major bank – one that was a key part of California’s massively important high-tech sector – required the intervention of governments around the world.
If the collapse of SVB was an isolated event, it might be easy to write it off as an anomaly and perhaps an interesting case study for economics students. Unfortunately, we also saw the failure of other banks in March.
The Silvergate Bank and Signature Bank failed. The massive Credit Suisse Bank was acquired by UBS after Swiss regulators imposed an extra-legal shutdown on the bank. The Swiss government chose to provide short-term loss guarantees and up to $100 billion in liquidity.
Vulnerable small – medium size US banks experienced a difficult week as their three rivals collapsed. Issues included rapid drops in share prices (67% in the case of the First Republic Bank and a reported 80% for Western Alliance Bancorporation).
Moody’s downgraded the credit ratings of several regional banks, as others were forced to turn to their larger counterparts for financial lifelines. First Republic alone required a $30 billion cash injection plus another $70 billion financing facility to stay afloat. Despite the financial aid, it remains unstable.
Why Did Four Banks Suddenly Fail?
The simple answer to why four banks suddenly failed is bad management, including a failure to adapt to changing market conditions and retain investor confidence. Signature Bank and Silvergate Bank were heavily involved with businesses in the cryptocurrency markets. Both banks had a dangerously high level of exposure to a very volatile (and unpredictable) industry.
A commercial bank is a service provider that depends on trust and positive investor sentiment. The minute that the reliability of the three US banks became a matter of public debate, there was a run on the banks. Investors panicked and rushed to withdraw their deposits, creating an unstoppable downward spiral.
The US government and financial authorities, and (in the case of Silicon Valley Bank) the British government, were quick to intervene. There was an emphasis on fast damage limitation and a concerted effort to maintain confidence in the wider international banking system. The authorities stopped short of outright bailouts but did move to protect depositors and bank customers.
Will Bank Failure Lead to a Global Recession?
It’s possible that the attempts by national governments to contain the fallout of the bank collapses may pay off. Although there is still a lot of media speculation about a global recession and general banking collapse. The markets have certainly been jittery, and the Fed may prudently delay further interest rate rises.
On the positive side, China’s banking system appears to be stable. National governments and their central banks, and the ECB, are now taking a long hard look at commercial banks and assessing their risk exposure, financial practices, and wider vulnerabilities. The stability of the banking industry is a major economic and political issue and a deep concern for politicians.
We can expect national banks and governments to take tough preemptive action to avert any more crises. This may also mean some moves towards greater regulation in the banking industry, perhaps with the introduction of tougher legal penalties for banking executives whose banks fail.
What’s the Bottom Line for Banking?
The bottom line is that nobody wants a repeat of the 2008 crisis that followed the collapse of the housing market. We could be in for a period of financial instability, but it can also be argued that financial instability is the new norm. The COVID-19 lockdowns tore up the old financial rule book, and the commodity crisis and war in Ukraine were also game changers.
The only thing that we can say with any certainty is that nobody can clearly predict what will happen next. There have been a number of positive factors in recent months, including a stronger US jobs market with 311,000 new jobs in February 2023. Immediately prior to the bank collapses, the Fed had considered that the economy could easily support another interest rate hike in the battle against inflation (which also appeared to be slowing).
If the world’s governments cooperate successfully to preserve the integrity of the international banking system, the failures of March 2023 will be remembered as a warning that was heeded. A 2008-style financial collapse and a global recession is currently entirely avoidable.
What Does Bank Collapse Mean for Financial Affiliates?
We’re currently in a ‘wait and see’ period as the banking crisis either progresses or fizzles out. This doesn’t mean that financial affiliates should be inactive or wait passively to see whether more banks fail in Q2 and Q3 of 2023. It’s time to start generating high-value content and dynamic affiliate marketing campaigns around the recent bank collapses.
Anybody who watches the news has genuine concerns about what’s in store for the global economy – and their own financial security. If you can address these concerns with clear, factual analysis, you’ll have a ready audience. Anybody who sees your social media posts or reads your content is a potential online trader and could be your next commission.
Your goal as a financial affiliate is to capitalize on the current situation and get your unique affiliate links into the public eye. Most successful broker affiliates find that it’s always better to take a positive tone (if not an optimistic one) and showcase the potential opportunities that online trading can create in uncertain market conditions.
For example, PacWest Bancorp stock dropped 21% on March 13th, then immediately recovered after trading was halted. Anybody who bought the stock when it plunged made a substantial profit in less than 24 hours. Relevant examples like these show potential traders that even extreme market volatility can create highly profitable trading opportunities.
Use Incentives and Present Strategies for Every Market
A great way for financial affiliates to drive traffic and boost conversions is to offer incentives like trading strategies. You could begin by providing a brief explanation of the banking crisis and an analysis of the current situation, then present three possible future scenarios: best case, worst case, and a middle route.
Offer online trading strategies for each scenario and identify asset classes like Forex, cryptos, stocks or bonds, and ETFs that may continue to reward investors. Stay within the guidelines that your partner programme gives you, and don’t offer direct financial advice, but do try to engage with readers and stimulate discussion and debate.
You can also invite social media contacts and site visitors to sign up for banking-related newsletters and alerts. Promise not to spam them and make an effort to provide them with high-converting marketing materials that are directly relevant to the banking crisis. If you can build a reputation as an authority, you will get repeat traffic, as well as new hits.
Stay Updated and Anticipate Events
One of the things that separates top tier financial affiliates (those with 6 figure plus incomes) from their less successful counterparts, is their grasp of current affairs. If you take the time to follow the financial news and to actually read alerts as they arrive, you’ll be a major step ahead of the crowd. You don’t need to become a subject matter expert – just a well informed commentator.
Being in the financial loop is half the challenge. You’ll also need to organise your affiliate marketing so that you can create your content and publish it online in time to capitalise on breaking news events. There are several excellent free marketing tools that you can use to produce and optimise your campaigns.
Work with the Best Financial Affiliate Partner Programme
Whether we’re heading for a global bull market or a bear market, your ability to earn sustained profits will depend on who you work with. Registered brokers like AvaTrade have the liquidity and the experience to continue to provide financial services to traders under any market conditions. AvaPartner has the expertise, flexibility and experience to help you to find the perfect commission plan for your business model.
The banking crisis might be generating a lot of negative headlines, but it’s potentially a great time to become a well paid financial affiliate. Sign up now and start earning your first commissions!