Lesson to Learn: How Higher Digital Maturity Could Have Saved Silicon Valley Bank!

March 10, 2023, the Silicon Valley Bank collapsed. It was one of the largest banks in the world and held billions of dollars worth of investments from investors around the globe. This collapse had a huge impact on both international markets and individual investors who lost their money because they were invested in one or more companies that were tied to this bank.

The reason why implementation of robust technologies or a higher Digital Maturity, could have saved this situation is because it would allow people to see what was going on with their investments before they made them and also give them an opportunity to pull out if they felt uncomfortable with where things were headed (like many did).

The Cause and Impact of the Collapse

The collapse of Silicon Valley Bank was due to inadequate risk management and poor oversight. The bank failed to properly identify the risks associated with its lending practices, which led to a lack of transparency in its financials.

The bank also lacked an effective internal control system that could have prevented these issues from occurring.

The collapse of Silicon Valley Bank was a major blow to the economy and financial sector. The loss of jobs, decrease in consumer confidence, disruption of financial services and other factors had a ripple effect that spread throughout the world.

What is Digital Maturity

Digital maturity refers to the level of digital transformation and integration within an organization. It reflects the extent to which technology is used to support business operations, improve customer experiences, and create new revenue streams. For banks, digital maturity is becoming increasingly important as customers demand transparency, more convenient and personalized services, and as new digital competitors enter the market.

Digital maturity involves a range of factors, including the use of advanced analytics, automation, cloud computing, and mobile technologies. It also requires a culture of innovation and a willingness to experiment with new technologies and business models.

Why higher Digital Maturity is a must!

Banks that have a high level of digital maturity are able to leverage technology to streamline processes, reduce costs, and offer innovative products and services. They are better equipped to respond to changing customer needs and to compete with new digital players.

Banks that invest in digital maturity can benefit from increased efficiency, enhanced customer experiences, and greater agility in responding to market changes. The benefits of technology in the financial sector are many. For instance, it can help banks manage risk more efficiently and effectively by providing better oversight, increasing trust between customers and banks, and improving customer service.

In summary, digital maturity is crucial for banks that want to remain competitive and relevant in the digital age. It allows them to offer more personalized services, reduce costs, and stay ahead of the curve in terms of innovation and customer expectations.

How Technology Could Have Prevented the Collapse

1. More effective risk management
2. Automated oversight
3. Increased transparency

If Silicon Valley Bank had invested in AI-based machine learning tools like Natural Language Processing (NLP) and Deep Neural Networks (DNN), they would have been able to identify patterns in their data that could have helped them realize the risks in the lending practices and predict the decline in their investments. This would have allowed them to take action before their losses got out of control--and potentially prevented their collapse altogether!

The Challenges of Implementing Technology

While technology has the potential to be a powerful tool, there are some challenges that must be overcome before it can be widely implemented.

• The Why, What and How?: Major financial institutions don't even know Why they need Digital Transformation? What core business areas to focus on while aiming for Digital Adoption? and How would the entire process of attaining Digital Maturity be?
• The Journey of Implementation: The journey of implementing new technologies such as MACH (Microservices, API-Driven, Cloud-First and Headless) and Predictive AI or Risk Management BI is often prohibitive for smaller banks and credit unions. Since they don't have right mindset to adopt innovation, they see this cost as CapEx and not OpEx, and the need for this only arises when a crisis is knocking the door!

The Take-Away

The benefits of implementing technology are clear: it can help you save money, increase efficiency, and provide a better customer experience. However, the challenges of implementing technology are also significant: there's a steep learning curve for employees; you need to invest in new hardware and software; and there's always the risk that something will go wrong with your system or software.

However, if you focus on finding the right partner and be an inclusive part of the journey with them, this change will only prove to be the best decision to attain higher RoI, higher Market Share and better Customer Experience overall.

The right partner is someone like Cygnet Digital Engineering Services who understands your business; who understands what your consumer needs, who can do Due Diligence of your current Digital Systems and recommend a roadmap of next 2 years with continuous improvements and enhancement in all areas of business with regular roll-outs and minimum disturbance to your existing team and set-up.