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What Financial Professionals Can Learn From the SVB Banking Failure

March 10, 2023 (5 min read)
Stock downward graph

The Federal Deposit Insurance Corp. (FDIC) made international headlines when it announced Friday, March 10 that it was closing the Silicon Valley Bank (SVB). This is the largest U.S. bank failure of the decade, as SVB is estimated to have had over $209 billion in assets, most of which were focused on tech and venture capital funding.

The closure of SVB sent shockwaves through the financial world as the startups and investors in the VC world feared the loss of their assets, and onlookers feared greater repercussions. Many businesses and proprietors worried they would never regain their full portfolios, as the insurance limit was $250,000, but the U.S. government stepped in on Sunday to ensure that holders would regain their assets in full.

In the midst of this news and the growing national concerns around recession and potential stock market woes, it’s more important than ever to monitor risk and find ways to increase consumer confidence. Financial tools like Nexis can help with risk monitoring and customer service so businesses can assuage the growing uncertainty.

Address customer concerns in a timely manner 

The SVB failure, and other banks, is causing distrust to skyrocket. Companies and individuals need to know that their money is in trustworthy hands, with advisors who are clued in on national trends and forecasts. In an industry with nearly constant change, it’s imperative that professionals have tools to help them weed through updates to identify the most important news.

Luckily, it’s easier than ever to stay up to date on market news. By using a data analytics tool to gain regular insight into the financial world, professionals can keep their fingers on the pulse without skimming hundreds of headlines every day. You can use programs like Nexis® to get real-time alerts that will come to your inbox whenever there is news worth knowing—like the collapse of SVB. With those regular notifications, businesses can rest assured that they won’t miss even the smaller stories.

Additionally, providers should use financial data tools and archives to gain full insight into the history of trends in their field. For instance, if you had an alert set up for SVB to regularly dive into the bank’s updates, you could have been on top of the bank’s financial trends that might otherwise have been missed. This can ensure that the places you’re recommending to your customers are being consistently vetted so you don’t make the error of giving bad advice.

Increase speed on customer service matters

In a digital world, news travels fast and panic can spread quickly—which is exactly what happened with the collapse of SVB. After the bank put out a press release last Wednesday, VCs began to pull their money from the bank and encouraged others to do so as well. This led to a run on the bank before regulators stepped in to stop the bleeding. However, this did not assuage customer fears and panic—and news continued to spread on social media.

Furthermore, the interconnected tech world also meant that other companies impacted needed to respond quickly to assuage customer fears and alert the public to the steps they’re taking. For example, the payroll company Rippling sent out a press release outlining the automatic steps they had taken to cover the payroll of their customers with money in SVB.

A move like this helps to shore up customer trust because customer service moved tirelessly and swiftly. While Rippling had the wherewithal to respond, they were also aided by a systematic workflow using online tools that automate customer service to avoid long wait times and service backups. Without these measures in place, it’s likely the crisis could have been far worse than it was.

Protect customer data and assets

Data protection is, of course, a massive part of the financial business. Consumers don’t just want to know that their money is in good hands—they also want reassurance that their personal, private information is safe and sound. Using automated tools reduces the possibility of human error and keeps PPI under lock and key. For instance, the two-factor authentication that’s available through many online portals immediately doubles security measures, and encrypted conversations ensure that messages with PPI aren’t easily hacked into.

Beyond information security, consumers are also worried about fraud. The Federal Trade Commission reported that fraud increased 70% from 2020 to 2021, accounting for over $5.8 billion in losses. Businesses can and should make use of fraud alerts to stay on top of any incoming attacks or concerns around their customers’ identities and assets.

MORE: How Banks are Using AI and Big Data to Sidestep Financial Crime Exposure

Back up your recommendations with research

Times of concern often result in more conservative financial habits, but the need to invest and store money will never go away. Financial advisors will always need to have their trusted recommendations, and data tools are crucial to keeping those lists up to par.

Being able to see a full, non-biased report for businesses is helpful at a time when many financial blogs are providing skewed metrics or only giving updates that make businesses appear more successful. It’s hard to know what sources to trust, so a third-party tool with thoroughly vetted sources and automated, non-human reports are the best way forward.

Using a tool like Nexis, providers will be able to research the financial market in a fast, trustworthy manner. All of Nexis’s sources are trusted and verified, and the search portal has intuitive functionality that allows for ease of use. Furthermore, with the Nexis Dossier tool, businesses can also download full reports and company snapshots to get the bigger picture.

Use technology to assuage fears

It’s safe to say, we’re experiencing a moment of distrust in the national banking industry—and everyone in the sector is feeling the squeeze. By vetting and thoroughly researching your recommendations, while simultaneously improving the customer service experience and monitoring crucial trends, businesses can ensure that the nationwide dip in trust does not impact their company negatively.

The worst-case scenario for financial advisors in 2023 is coming into client or customer-facing meetings and being told news they should have already known about. And with the market landscape changing daily as new news develops, tools like Nexis® can make sure you never miss crucial information that may help you or your clients make important financial decisions.

Learn more about Nexis® for Financial Services and see how our top-notch research tools can help you monitor risk.