A Silicon Valley Bank sign, coinciding with a government-assisted sale in mid-March, prompts enhancements to its resilient payment platforms.
Responsible for SVB's client-oriented payment solutions, Gagan Kanjlia pinpointed real-time payments and integrated payments as critical areas of emphasis on SVB's agenda.
SVB joined the Clearing House's real-time payment network in October 2022, enabling instant receipt of payments. By late 2023, clients can also send payments through RTP.
Following its acquisition by First Citizens BancShares Inc. after a crisis in March that saw it as the 19th-largest U.S. bank by assets, Silicon Valley Bank (SVB) is now gearing up to enhance the capabilities of its payment platform.
According to Gagan Kanjlia, the bank's Chief Product Officer, SVB's digital payment system has successfully handled a surge in payment inquiries during the crisis by scaling up to meet the increased demand. Under its new parent company's direction, SVB aims to strengthen and expand the platform's features, underscoring its commitment to delivering robust financial services.
Customers withdrew $42 billion recently, equivalent to 25.3% of Silicon Valley Bank's total deposits. The Federal Reserve reported that the anticipated withdrawal rate increased to 60.2% a day later, surpassing one-day withdrawal rates in other significant bank failures. These deposit outflows severely impacted SVB's financial position. Consequently, the bank initiated measures to reinforce its payment systems and ensure its technology infrastructure and vendor capabilities were equipped to handle the substantial volume of fund transfers.
Gagan Kanjlia affirmed that while the action did contribute to the outflow of funds, it was a decision made in the best interests of their clients.
The swift outflow of funds at SVB raised industry-wide concerns, leading banks to re-examine their risk control procedures in the digital banking era. However, SVB remains undeterred and continues to advance its payment platform.
Gagan Kanjlia said, "Real-time payments is going to be more inexpensive on a fully loaded cost basis. Because it results in less inquiry, less confusion between multiple parties." He added, "That's actually a good thing for both sides."
[Source – S&P Global Market Intelligence]
Responsible for SVB's client-facing payment solutions, Gagan Kanjlia pinpointed real-time payments and embedded payments as critical priorities for SVB. It has been active on Clearing House's real-time payment network (RTP) since October 2022, enabling its customers to receive instant payments. He further noted that by the end of 2023, customers will also be able to initiate payments on RTP.
In August, SVB took a strategic step by appointing Martin Murrell as Head of Global Payments and Milton Santiago as Head of Global Digital Solutions, marking the beginning of a collaborative roadmap with First Citizens. Real-time payments are a central focus of this initiative, with plans for seamless integration into SVB's digital system. The bank has established a substantial capital buffer to ensure robust liquidity and capital levels.
By the first quarter of 2024, SVB customers can initiate instantaneous payouts through RTP via the bank's API banking channel. Furthermore, SVB is poised to provide instant settlement services for merchants working with payment facilitators, prompt loan funding, and disbursements, including early wage access. The bank remains steadfast in its commitment to implementing FedNow, the Federal Reserve's real-time payment network launched in July.