SVB’s tech failings were a problem long before the bank run that led to its demise, critics say
Nikolas Kokovlis | Nurphoto | Getty Images
Silicon Valley Bank’s historic meltdown last week was largely attributed to deteriorating business conditions in the firm’s concentrated customer base and an ill-timed decision to invest billions of dollars in mortgage-backed securities.
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.
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Massachusetts is launching a first-of-its-kind statewide vehicle-to-everything (V2X) pilot program. This two-year initiative, backed by the Massachusetts Clean Energy Center (MassCEC), aims to deploy 100 bidirectional chargers to homes, school buses, municipal, and commercial fleet participants across the state.
These bidirectional chargers will enable EVs to serve as mobile energy storage units, collectively providing an estimated 1.5 MW of new storage capacity. That means EVs won’t just be getting power – they’ll be giving it back to the grid, helping to balance demand and support renewable energy use. The program is also focused on ensuring that low-income and disadvantaged communities have access to this cutting-edge tech.
The Massachusetts pilot is one of the largest state-led V2X initiatives in the US and is designed to tackle key challenges in deploying bidirectional charging technology. By strategically placing these chargers in a variety of settings, the program aims to identify and resolve barriers to wider adoption of V2X technology.
Massachusetts EV owners and fleet operators enrolled in the program will get bidirectional chargers capable of both vehicle-to-grid (V2G) and backup power operations at no cost. Here’s what they stand to gain:
- No-cost charging infrastructure: Bidirectional charging stations and installation are fully covered for participants.
- Grid resilience: With an estimated 1.5 MW of new flexible and distributed storage assets, the program strengthens Massachusetts’ energy infrastructure.
- Clean energy integration: V2G technology allows EVs to charge when renewable energy is available and discharge stored energy when it’s not, supporting the state’s clean energy goals.
- Backup power: EV batteries can be used as backup power sources during outages.
- Revenue opportunities: Some participants can earn money by sending stored energy back to the grid.
Clean energy solutions firm Resource Innovations and vehicle-grid integration tech company The Mobility House are leading the program’s implementation. “With the charging infrastructure provided through this program, we’re eliminating financial barriers and enabling school districts, homeowners, and fleets to access reliable backup power,” said Kelly Helfrich of Resource Innovations. “We aim to create a scalable blueprint for V2X programs nationwide.”
“Bidirectional charging benefits vehicle owners by providing backup power and revenue opportunities while strengthening the grid for the entire community,” added Russell Vare of The Mobility House North America.
The program is open for enrollment now through June 2025. For more details, visit the MassCEC V2X Program webpage. A list of eligible bidirectional vehicles can be found on that page.
Read more: Cambridge’s new solar VPPA is the largest ever by any US city
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Compton, California, has unveiled 25 new electric school buses – the school district’s first – and 25 Tellus 180 kW DC fast chargers.
Compton Unified School District (CUSD) in southern Los Angeles County is putting 17 Thomas Built Type A and eight Thomas Built Type C electric school buses on the road this spring. In addition to working with Thomas Built, CUSD also collaborated with electrification-as-a-service provider Highland Electric Fleet, utility Southern California Edison, and school transportation provider Durham School Services.
Environmental Protection Agency’s (EPA) Clean School Bus Program awarded funds for the vehicles in the program’s first round. EPA also awarded CUSD funds for the third round of the program and anticipates introducing an additional 25 EV school buses in the future.
“I can’t stress enough how vital grants like these are and the need for continued support from our partners in government at the state and federal level to fund additional grants for school districts and their transportation partners that are ready to deliver and operate zero-emission buses,” said Tim Wertner, CEO of Durham School Services.
CUSD, which serves Compton and parts of the cities of Carson and Los Angeles, currently serves more than 17,000 students at 36 sites. The district has a high school graduation rate of 93% and an 88% college acceptance rate. One in 11 children in Los Angeles County have asthma, which makes the need for emissions-free school transportation that much more pressing.
Read more: Thomas Built Buses debuts its next-gen electric school bus
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After cutting lease prices by $200 this month, the Rivian R1S is now surprisingly affordable. It may even be a better deal than the new Tesla Model Y.
Rivian cuts R1S lease prices by $200 per month
Rivian’s R1S is one of the hottest electric SUVs on the market. If you haven’t checked it out yet, you’re missing out.
With some of the best deals to date, now may be the time. Rivian lowered R1S lease prices earlier this month to just $599 for 36 months, with $8,493 due at signing (30,000 miles). The offer is for the new 2025 R1S Adventure Dual Standard, which starts at $75,900.
Before the price cut, the R1S was listed at $799 per month, with $8,694 due at signing. The electric SUV now has the same lease price as the R1T, despite costing $6,000 more.
The 2025 R1T Dual Motor starts at $69,900, essentially making it a free $6,000 upgrade. At that price, you may even want to consider it over the new Tesla Model Y.
Tesla’s new Model Y Launch Series arrived with lease prices of $699 for 36 months. With $4,393 due at signing, the effective rate is $821 per month, or just $13 less than the R1S at $834. However, the 2025 R1S costs nearly $15,000 more, with the Model Y Launch Series price at $59,990.
Rivian is also offering an “All-Electric Upgrade Offer” of up to $6,000 for those looking to trade-in their gas-powered car, but base models are not included.
| Starting Price | Range (EPA-est.) |
|
| 2025 Rivian R1S Dual Standard | $75,900 | 270 miles |
| 2026 Tesla Model Y Launch Series | $59,990 | 327 miles |
To take advantage of the Rivian R1S lease deal, you must order it before March 15 and take delivery on or before March 31, 2025.
The 2025 Rivian R1S Dual Standard Motor has an EPA-estimated range of up to 270 miles. Tesla’s new Model Y Launch Series gets up to 327 miles.
Which electric SUV would you choose? Rivian’s R1S or the new Tesla Model Y? If you’re ready to check them out for yourself, you can use our links below to find deals on the Rivian R1S and Tesla Model Y in your area.
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