SVB’s tech failings were a problem long before the bank run that led to its demise, critics say
But long-time clients and others with intimate knowledge of how SVB operated say the bank did itself no favors. Between the bank’s refusal to upgrade its technology to meet the demands of modern-day businesses and its treatment of many startup customers, SVB’s problems extended beyond its risk profile and a challenging economy.
An ex-SVB manager, who worked on risk initiatives and asked not to be identified, said the bank remained technologically stagnant even as it was a haven for startups that had an eye for cutting-edge software and products. As she described it, “the backend of the bank is all bubblegum and wires.”
Three startup CEOs who bank with SVB agreed, telling CNBC that the user experience was often clunky and at times, slow to fulfill requests.
David Selinger, CEO of physical security company Deep Sentinel, told CNBC that SVB fumbled its response to the Covid pandemic, after the government initiated the emergency payment protection program (PPP). The loans from the program were designed to allow companies to continue paying employees during the economic shutdown.
“It completely failed in the midst of all these companies needing to get their PPP funds,” said Selinger, who spent the majority of Friday trying to pull assets out of SVB.
Selinger, a former Amazon executive who has the backing of Jeff Bezos for Deep Sentinel, said his company had tried to use various automated services provided by SVB but ended up having to do everything manually, “clawing hand over foot to try to get to PPP funds, because the fulfillment didn’t work.”
“I love SVB, but that was horrible for our business,” he said. “They had written some code to try to make it faster and none of it worked.”
One CEO, who had millions of dollars housed at SVB and asked not to be named, described the bank’s system as terrible, slow and “the worst in the industry.” He said the tech looked like it was built in 2002.
In April 2020, Tech Crunch reported on other SVB customers complaining that the bank mishandled the PPP process.
CNBC sent an email to SVB’s press address requesting a comment for this story but we haven’t yet received a reply.
SVB’s swift collapse began late Wednesday, when the bank told investors that it sold $21 billion worth of securities at a $1.8 billion loss and was seeking to raise additional capital amid a decline in deposits. By Thursday, as the stock was plunging and venture firms were telling portfolio companies to pull their money, Twitter lit up with people offering advice and making pleas.
Some SVB defenders told their followers that they needed to band together and support the 40-year-old bank, which has long been central to the tech ecosystem. One startup founder, Robert McLaws, responded to a particular tweet and offered a very different perspective.
“As an @SVB_Financial customer for the last 5 years, they are terrible as an actual bank & are getting what they deserve,” wrote McLaws, CEO of BurnRate.io. “Their tech stack has not moved 1 iota, their fees are punitive, and if you’re not in SV you’re invisible.”
Villi Iltchev, a partner at Two Sigma Ventures and the author of the original tweet, responded, “I have the opposite experience. I have loved every interaction with them.”
Another founder and CEO, who’s based in Los Angeles, told CNBC he considered leaving the bank nearly a year ago after it took six weeks and five phone calls to transfer the funds needed to open the company’s head office. He has $750,000 with SVB, which is triple the amount insured by the Federal Deposit Insurance Corporation.
The FDIC seized SVB on Friday following a run on the bank by depositors. It was the second-biggest bank failure in U.S. history and the largest since the financial crisis 15 years ago.
Banking regulators devised a plan Sunday to shore up deposits at SVB, as they try to quell a feared panic over the firm. The central bank said it’s creating a new Bank Term Funding Program aimed at safeguarding institutions impacted by the SVB failure. In addition, regulators said depositors at both SVB and Signature Bank in New York will have full access to their deposits.
Roughly 95% of SVB’s deposits are uninsured, which makes the bank particularly unique in that it serves primarily businesses. However, the risk of contagion led to a plunge on Friday in shares of other regional banks such as First Republic and PacWest Bancorp.
Lack of mobile security
The former SVB manager, who was hired to prepare the bank for a rapidly growing asset base, said that implementing biometric authentication on the bank’s mobile banking app was one of its technical failures. Startup finance execs were left with a “password-based login” to protect their funds, because building authentication into the app “was seen as too expensive, complicated to do and not value additive to clients,” the person said.
Even attempts at shoring up its internal tech through a partnership with payments giant Stripe, ended up flopping, according to the former SVB employee.
In 2016, SVB announced an agreement with Stripe to launch a product called Atlas “to give entrepreneurs everywhere access to the basic building blocks for starting a global internet business.” Approved founders and execs would receive a tax ID number, a U.S. bank account from SVB, a Stripe account to receive payments from anywhere and services like tax guidance from PwC, legal help from Orrick, Herrington & Sutcliffe “and tools and credits from Amazon Web Services.”
But the ex-SVB employee said after the big announcement “technically SVB wasn’t able to pull it off on our end.” The lack of investment in SVB’s technology made the job of risk compliance difficult, the person said.
Atlas works with Mercury Bank and Novo Bank, according to its website.
Stripe did not immediately offer a comment for this story.
While SVB was “undoubtedly one of the best banks” for startups, the person continued, as clients grew they were “forced to switch” because of the bank’s inferior technology.
— CNBC’s Ashley Capoot contributed to this report.
WATCH: Silvergate Capital shares plummet after announcing plans to liquidate its crypto bank
Amazon to lay off 9,000 more workers in addition to earlier cuts
The latest round will primarily impact Amazon’s cloud computing, human resources, advertising and Twitch livestreaming businesses, Jassy said in the memo.
Amazon is undergoing the largest layoffs in company history after it went on a hiring spree during the Covid-19 pandemic. The company’s global workforce swelled to more than 1.6 million by the end of 2021, up from 798,000 in the fourth quarter of 2019.
Jassy is also undergoing a broad overview of the company’s expenses as it reckons with an economic downturn and slowing growth in its core retail business. Amazon froze hiring in its corporate workforce, axed some experimental projects and slowed warehouse expansion.
While the company aims to operate leaner this year, Jassy said he remains optimistic about the company’s “largest businesses,” retail and Amazon Web Services, as well as other, new divisions it continues to invest in.
Shares of Amazon were down more than 2% in afternoon trading Monday.
Let me share some additional context.
As part of our annual planning process, leaders across the company work with their teams to decide what investments they want to make for the future, prioritizing what matters most to customers and the long-term health of our businesses. For several years leading up to this one, most of our businesses added a significant amount of headcount. This made sense given what was happening in our businesses and the economy as a whole. However, given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount. The overriding tenet of our annual planning this year was to be leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole.
As our internal businesses evaluated what customers most care about, they made re-prioritization decisions that sometimes led to role reductions, sometimes led to moving people from one initiative to another, and sometimes led to new openings where we don’t have the right skills match from our existing team members. This initially led us to eliminate 18,000 positions (which we shared in January); and, as we completed the second phase of our planning this month, it led us to these additional 9,000 role reductions (though you will see limited hiring in some of our businesses in strategic areas where we’ve prioritized allocating more resources).
Some may ask why we didn’t announce these role reductions with the ones we announced a couple months ago. The short answer is that not all of the teams were done with their analyses in the late fall; and rather than rush through these assessments without the appropriate diligence, we chose to share these decisions as we’ve made them so people had the information as soon as possible. The same is true for this note as the impacted teams are not yet finished making final decisions on precisely which roles will be impacted. Once those decisions have been made (our goal is to have this complete by mid to late April), we will communicate with the impacted employees (or where applicable in Europe, with employee representative bodies). We will, of course, support those we have to let go, and will provide packages that include a separation payment, transitional health insurance benefits, and external job placement support.
If I go back to our tenet—being leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole—I believe the result of this year’s planning cycle is a plan that accomplishes this objective. I remain very optimistic about the future and the myriad of opportunities we have, both in our largest businesses, Stores and AWS, and our newer customer experiences and businesses in which we’re investing.
To those ultimately impacted by these reductions, I want to thank you for the work you have done on behalf of customers and the company. It’s never easy to say goodbye to our teammates, and you will be missed. To those who will continue with us, I look forward to partnering with you as we make life easier for customers every day and relentlessly inventing to do so.
OpenAI CEO Sam Altman says he’s a ‘little bit scared’ of A.I.
David Paul Morris | Bloomberg | Getty Images
OpenAI developed the ChatGPT bot, which creates human-like answers to questions and ignited a new AI craze.
“I think people really have fun with [ChatGPT],” Altman said in the interview.
But his excitement over the transformative potential of AI technology, which Altman said will eventually reflect “the collective power, and creativity, and will of humanity,” was balanced by his concerns about “authoritarian regimes” developing competing AI technology.
“We do worry a lot about authoritarian governments developing this,” Altman said. Overseas governments have already begun to bring competing AI technology to market.
Chinese tech company Baidu, for example, recently held a release event for its ChatGPT competitor, a chat AI called Ernie bot.
Years before Russia’s invasion of Ukraine, Russian President Vladimir Putin said whoever becomes the leader in AI technology “will be the ruler of the world.” Altman called the comments “chilling.”
Both Google and Microsoft have aggressively stepped up their AI plays. Microsoft chose to partner with Altman’s OpenAI to integrate its GPT technology into Bing search. Google parent Alphabet unveiled an internally developed chatbot called Bard AI, to mixed feedback from Google employees and test drivers.
The influence of ChatGPT and AI tools like it hasn’t yet reverberated through the American election process, but Altman said the 2024 election was a focus for the company.
“I’m particularly worried that these models could be used for large-scale disinformation,” the CEO told ABC.
“Now that they’re getting at writing computer code, [models] could be used for offensive cyberattacks,” he said.
ChatGPT’s programming prowess has already made a mark on many developers. It already functions as a “co-pilot” for programmers, Altman said, and OpenAI is working toward unlocking a similar functionality for “every profession.”
The CEO acknowledged that it would mean many people would lose their jobs but said it would represent an opportunity to come up with a better kind of job.
“We can have a much higher quality of life, standard of living,” Altman said. “People need time to update, to react, to get used to this technology.”
Microsoft is using OpenAI to make it easier for doctors to take notes
Chesnot | Getty Images
DAX Express aims to help reduce clinicians’ administrative burdens by automatically generating a draft of a clinical note within seconds after a patient visit. The technology is powered by a combination of ambient A.I., which forms insights from unstructured data like conversations, and OpenAI’s newest model, GPT-4.
Diana Nole, the executive VP of Nuance’s healthcare division, told CNBC that the company wants to see physicians “get back to the joy of medicine” so they can take care of more patients.
“Our ultimate goal is to reduce this cognitive burden, to reduce the amount of time that they actually have to spend on these administrative tasks,” she said.
Microsoft acquired Nuance for around $16 billion in 2021. The company derives revenue by selling tools for recognizing and transcribing speech during doctor office visits, customer-service calls, and voicemails.
DAX Express complements other existing services that Nuance already has on the market.
Nole said the technology will be enabled through Nuance’s Dragon Medical One speech recognition application, which is used by more than 550,000 physicians. Dragon Medical One is a cloud-based workflow assistant that physicians can operate using their voices, allowing them to navigate clinical systems and access patient information quickly, Clinical notes generated by DAX Express will appear in the Dragon Medical One desktop.
DAX Express also builds on the original DAX application that Nuance launched in 2020. DAX converts verbal patient visits into clinical notes, and it sends them through a human review process to ensure they are accurate and high-quality. The notes appear in the medical record within four hours after the appointment.
DAX Express, in contrast, generates clinical notes within seconds so that physicians can review automated summaries of their patient visits immediately.
“We believe that physicians, clinicians are going to want a combination of all of these because every specialty is different, every patient encounter is different. And you want to have efficient tools for all of these various types of visits,” Nole said.
Nuance did not provide CNBC with specifics about the cost of these applications. The company said the price of Nuance’s technology varies based on the number of users and the size of a particular health system.
DAX Express will initially be available in a private preview capacity this summer. Nole said Nuance does not know when the technology will be more widely available, as it will depend on the feedback the company receives from its first users.
Patient information is particularly sensitive and regulated under HIPAA and other laws. Alysa Taylor, a corporate vice president in the Azure group at Microsoft, told CNBC that DAX Express adheres to the core principles of Microsoft’s responsible A.I. framework, which guides all A.I. investments the company, as well as additional safety measures that Nuance has in place. Nuance has strict data agreements with its customers, and the data is fully encrypted and runs in HIPAA-compliant environments.
Nole added that even though the A.I. will help physicians and clinicians carry out the administrative legwork, professionals are still involved every step of the way. Physicians can make edits to the notes that DAX Express generates, and they sign off on them before they are entered into a patient’s electronic health record.
She said, ultimately, using DAX Express will help improve both the patient experience and the physician experience.
“The physician and the patient can just face one another, they can communicate directly,” Nole said. “The patient feels listened to. It’s a very trusted experience.”
As part of Rahul Gandhi’s trials, Kanhaiya may get bigger role in Congress
Australian Bankers Association cost of living probe shows bank pressure
Bushiroad President Takaaki Kidani Steps Down as BanG Dream! Franchise’s Executive Producer
Walmart-owned Sam’s Club plans to open about 30 new stores over next five years
22/7 Project’s Reina Miyase Graduates From Franchise
NBUniversal expects Peacock losses to peak this year as streamer slowly adds subscribers
Watch: Bride Arrives At Wedding Venue In Madhya Pradesh Driving Tractor
In September 2022, ‘The Lord of the Rings: Gollum’ will be released for PC, PS5, and Xbox Series X.
Dhaakad Day 1 Box Office Report: Kangana Ranaut’s film debuts poorly in front of Bhool Bhulaiyaa 2 by Kartik Aaryan.
Entertainment2 months ago
Fake heiress Anna ‘Delvey’ Sorokin, while on house arrest, to star in new reality show – National | Globalnews.ca
Tech2 months ago
Tesla shares pop on ‘better than feared’ earnings results, demand outlook
Crypto2 months ago
Tesla refuses to sell any more Bitcoin
Business2 months ago
Southwest forecasts lingering losses as bookings slow in wake of holiday meltdown
Anime & Manga2 months ago
StoneBot Comics Provides Statement on Kamen Rider Kuuga Manga’s Translation Differences from Initial Preview
Odisha News2 months ago
Police Medals: 34 Odisha Police personnel awarded on Republic Day
Politics2 months ago
Chhattisgarh CM Bhupesh Baghel announces unemployment allowance
Fashion2 months ago
Robert Wun Couture Spring 2023
You must be logged in to post a comment Login
You must log in to post a comment.