Silicon Valley Bank last week’s historic collapse was largely attributed to deteriorating business conditions in the firm’s concentrated client base and an ill-timed decision to invest billions of dollars in mortgage-backed securities.

But longtime customers and others who know how SVB works say the bank has done itself no favors. Between the bank’s failure to modernize its technology to meet the demands of today’s business and its treatment of many first-time customers, SVB’s problems went beyond its risk profile and difficult economics.

A former SVB manager who worked on risk initiatives and asked not to be named said the bank remained technologically stagnant, even as it was a haven for startups with cutting-edge software and products. As she described it, “the backend of a bank is bubblegum and wires.”

Three startup executives working with SVB agreed, telling CNBC that the user experience was often clunky and sometimes slow to process requests.

David Selinger, CEO of physical security firm Deep Sentinel, told CNBC that SVB had misfired with its response to the Covid pandemic after the government initiated the Emergency Payment Protection Program (PPP). Loans under the program were designed to allow companies to continue paying employees during an economic shutdown.

“It fell flat against the backdrop of all these companies needing to get PPP funds,” said Salinger, who spent much of Friday trying to get assets out of SVB.

Salinger, ex Amazon The head of Jeff Bezos-backed Deep Sentinel said his company tried to use various automated services provided by SVB, but ended up having to do everything manually, “by hand, to try to get the PPP funds because the execution didn’t work.” .

Representative Brian Steele: The vast majority of our banks are well capitalized

“I love SVB, but it was terrible for our business,” he said. “They wrote some code to try to make it faster, and none of it worked.”

One CEO, who has millions of dollars stashed away at SVB and who asked not to be named, described the bank’s system as terrible, slow and “the worst in the industry.” He said the equipment looks like it was built in 2002.

In April 2020, Tech Crunch reported on other SVB customers who complained that the bank had mismanaged the PPP process.

CNBC sent an email to SVB Press for comment on this story, but we have not yet heard back.

SVB’s precipitous collapse began late Wednesday when the bank told investors it had sold $21 billion in securities at a loss of $1.8 billion and was looking to raise more capital amid declining deposits. By Thursday, as stocks tumbled and venture capital firms ordered portfolio companies to withdraw their money, Twitter lit up with people offering advice and asking for advice.

Some defenders of SVB told their followers that they needed to rally and support the 40-year-old bank, which has long been at the center of the tech ecosystem. One of the startup’s founders, Robert McLaws, responded to a certain tweet and offered a completely different perspective.

“How @SVB_Financial customers over the past 5 years, they’re as awesome as a real bank and get what they deserve,” wrote McLaws, CEO of “Their technology stack hasn’t changed one iota, their fees are penal, and if you’re not in SV, you are invisible.”

Willy Ilchev, a partner at Two Sigma Ventures and the author of the original tweet, responded: “I have the opposite experience. I enjoyed every interaction with them.”

Another Los Angeles-based founder and CEO told CNBC he considered leaving the bank nearly a year ago after it took six weeks and five phone calls to wire the funds needed to open the company’s headquarters. He has $750,000 in SVB, triple the amount insured by the Federal Deposit Insurance Corporation.

The FDIC seized SVB on Friday after depositors attacked the bank. It was the second largest bank failure in US history and the largest since the financial crisis 15 years ago.

Banking regulators drew up a plan on Sunday to support deposits at SVB as they try to quell the panic that is brewing around the firm. The central bank said it was establishing a new emergency bank financing program aimed at protecting institutions affected by the SVB failure. In addition, regulators said SVB and Signature Bank depositors in New York will have full access to their deposits.

Approximately 95% of SVB’s deposits are uninsured, making the bank particularly unique in that it primarily serves businesses. However, the risk of contagion caused shares of other regional banks to fall on Friday, such as The first republic and PacWest Bancorp.

Lack of mobile security

A former SVB manager who was hired to prepare the bank for rapid growth in its asset base said the implementation of biometric authentication in the bank’s mobile banking app was one of its technical failures. The startup’s CFOs abandoned “password-based login” to protect their funds because building authentication into the app was “considered too expensive, difficult to implement and not adding value to customers,” the person said.

According to a former SVB employee, even efforts to bolster its internal technology through a partnership with payments giant Stripe have failed.

In 2016, SVB announced an agreement with Stripe to launch a product called Atlas “to give entrepreneurs everywhere access to the essential building blocks to launch a global online business.” Approved founders and executives will receive a tax identification number, a US bank account from SVB, a Stripe account to receive payments from anywhere, and services such as tax advice from PwC, legal assistance from Orrick, Herrington & Sutcliffe, and tools and loans from Amazon Web Services”.

But a former SVB employee said after the big announcement that “technically SVB couldn’t do it from our side”. The lack of investment in SVB’s technology has made it difficult to meet risk requirements, the person said.

Atlas works with Mercury Bank and Novo Bank, according to its website.

Stripe did not immediately offer comment for this story.

While SVB was “undoubtedly one of the best banks” for startups, the person continued, as customers grew, they were “forced to move” because of the bank’s inferior technology.

— CNBC’s Ashley Capote contributed to this report.

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