Can State of the Art Banking Solutions Prevent Falls like SVB?

The fall of SVB (Silicon Valley Bank) is not unknown to anyone. It has been the talk of the town for the past few weeks. A bank worth 212 billion dollars just falls like a leaf and that has surprised many people and businesses. As per the reports, this is the second largest shut off case in the banking industry in US history (source).

This bank had attracted several business owners to deposit in the company with its “Zero Money” interest rate offering and it had enjoyed huge success for more than a decade. But, suddenly things started turning down everything for the management of this bank and finally, its fall was announced which put everyone in shock. There are multiple reasons behind the Silicon Valley Bank collapse.

3 major reasons behind the fall of Silicon Valley Bank:

1. Startup clients pulling out their deposits

Technology startup companies deposited funds in SVB by getting attracted to the “Zero Money” option. COVID 19 and several other driving factors occurring since then have started bringing recession in the tech sector. Additionally, to tame inflation SVB imposed steep hikes in interest rates because of the change of interest rates imposed by the Federal.

This encouraged tech startups that were a huge part of depositors for SVB to start withdrawing funds. A sudden spike in fund withdrawal pushed the situation of Silicon Valley Bank collapse.

2. Selling Stock at a loss

To tame the situation aroused due to the sudden withdrawal by account holders of SVB, the bank also sells some of its shares at loss. Then, the shareholders of the bank started giving up their stocks at lower rates, which pulled down the valuation of the bank and also pushed the bank toward the fall.

3. Empty chair of a chief risk officer (CRO)

In the banking industry, each key role needs to have a skilled person to handle respective departments to successfully sail the boat of business to success. As per the reports, the Silicon Valley Bank did not have a CRO for a long time and this put them in a situation of failure.

The role of a CRO is crucial in any bank or huge enterprise like SVB. A CRO is responsible for forecasting the changing market dynamics, inflammation, and other factors that can create threats or opportunities. As the position was empty, there was no expert that could predict the upcoming scenario of inflammation, slowing down the tech industry, etc., and that resulted in the Silicon Valley Bank Collapse.

How to prevent banks from falling like SVB?

Banking is one of the high risk industries and that is why it is necessary for banks to be prepared for situations like this. One thing banks need is to be a long run player by experimenting in the market and another thing a bank needs to do is learn from the mistakes of banks like SVB. A few quick lessons that banks can learn from Silicon Valley Bank Collapse are briefly shared hereunder.

1. Keep different sources of revenue

The first lesson to learn from this biggest case of bank failure is that banks should not depend on a single channel to generate revenue. Banking products can have a diverse portfolio to generate revenue. Keeping a single source of revenue generation can doom any brand and banks are not an exception here.

The state of the art solutions specifically developed for banks can definitely help banks in multiple ways. One of the best products that can help banks to overcome this challenge of diversifying their revenue model is a feature rich contact center solution. Let’s see how:

• The first advantage of using this software is to run outbound campaigns to generate leads or awareness about other banking products. Each bank holds multiple products. Using outbound auto dialers like predictive dialers, preview dialers, power dialers, progressive dialers, etc. the team of a bank can generate awareness about diverse products. They can also onboard new customers by reaching out to more customers.

• A contact center solution will also generate reports of the outbound campaigns, as well as regular customer care campaigns. These reports are full of actionable insight, which can be used to segment audiences to run further sales campaigns. This data can also be used to identify cross selling and up-selling business opportunities to generate more revenue.

• Collection is one major area that a bank can focus on to increase revenue. Collection of loans, credit card bills, etc. is possible using a collection module that can be integrated into an on-premise or cloud call center software solution. Once the collection module is integrated into the software, it can be used to run debt collection campaigns more efficiently. This can help in increasing revenue and keeping funds to support the business of the bank.

2. Be Future-proof

This is a very important part to stay competitive and profit making in any industry and banks are not staying behind. One of the major reasons behind the Silicon Valley Bank Collapse is definitely that they did not identify the risks and threats. A contact center solution and other state of the art products can help here as well. A careful review of reports generated by this software can help banks to identify risks and opportunities.

Moreover, artificial intelligence is paving the way to develop features to increase the efficiency of a contact center solution. Based on historic data and other data sources such as the stock market, these AI based solutions can augment ways to forecast the future of the banks. This helps banks to be prepared for upcoming market changes.

3. Have experts onboard

Along with having the best contact center solution, banks also need to have expert team members. From an agent handling customer care calls to the chief risk officer, each important key personnel must be part of the team of banks. A bank can also have a technology partner who can persistently empower the bank with powerful and state of the art solutions and products.

As technological inventions take place, the bank can accommodate those changes to benefit from them with recommendations or the help of a technical partner. Never make a mistake that the Silicon Valley Bank made by keeping the position of CRO empty for a long time.

Conclusion

Technology has its role everywhere and the banking sector cannot be overlooked. It is necessary for banks to acquire the best technical expertise and infrastructure with state of the art solutions to stay competitive and profit making in a fiercely competitive industry.

The case of the Silicon Valley Bank Collapse is traumatic for several banks as such a huge and billion dollar bank can fail, then small scaled banks see their future in dark. But, the right tools and technology can help banks to stay in the game without losing sight.

A contact center solution with the right tools such as a collection module, omnichannel communication support, Artificial Intelligence based voice analysis, etc. can be a great tool for banks. It can help banks to secure their present and future if used correctly.

Our company, Elision Technologies Pvt. Ltd has been empowering several Indian banks such as PMC, SVC, etc. with the best technology solutions. We can help your bank as well. We have the best omnichannel contact center solution that can meet all your market needs. For more details, book a demo now!