Data assembled by Jonathan Friedman.
When you’re on an email list with other startup founders, you sometimes discover that you’re facing a problem that’s widely shared. Recently, a founder was having a rough time with his current bank, Silicon Valley Bank (SVB), and turned to the Y Combinator email list for banking recommendations:
Every experience with SVB has been painful…. we’re looking for a more technologically progressive bank. In particular we’d like to have a better online banking experience and be able to execute documents with electronic signatures. Any recommendations?
Instead of getting helpful tips about other banks he could use, the founder was inundated by complaints about Silicon Valley Bank’s online banking capabilities:
I just wanted to follow-up with an email I [sent at the] end of 2013 - I basically complained about SVB and was asking for referrals for other banks. The majority of the 30+ emails I received were from others expressing their frustration with SVB too.
The press calls Silicon Valley Bank the "bank for startups" and the "bank of the tech stars," yet it turns out that startup founders hate being customers there. The name alone conveys that you’ve arrived in Silicon Valley, and that it's now time to change the world while sitting cross-legged on top of a desk. The website conveys a similar message:
The company's marketing reinforces that it knows where its bread is buttered. According to the SVB website, all the industries they serve are tech or investment related (with the exception of the "premium wine" industry). The company is also one of the most consistent sponsors of startup-related events to market the message that if you are a tech company, you should be banking with Silicon Valley Bank.
But once startups sign up, they seem to regret choosing Silicon Valley Bank. The customers find SVB’s employees nice and responsive, but they hate this supposedly tech savvy bank’s website.
Below are some representative complaints made by founders about SVB’s online banking (edited for grammar):
This website sucks -- it's really unintuitive and really unattractive.
Their wires are impossible to negotiate, their website is a dog, debit cards don't work in foreign countries, their ATM rates don't make any sense (but don't function anyway), their banking hours stop at 3pm, they have comical security requirements (don't get me started on their two-factor authentication), and it took ﬁve people three months to transfer the primary account signer from one of our founders to our CFO.
Features disabled -- I had to explicitly enable features that should be enabled by default: depositing checks on my phone, which also takes a few days to do.
The Bill Pay UI is hard to use and clunky. It's hard to search through past bills paid and easily view all transactions with a speciﬁc payee.
They are so dysfunctional it's kind of charming. If you know someone there on the non-banking side of things one can get by. We'll be sticking with them despite how bad this sounds.
If I wanted a painless, anonymous experience that "just works," I would go with BoA. But BoA doesn't throw nice Christmas parties for their Startups. I kind of enjoy SVB's personal touch.
So, SVB throws a fancy Christmas party for startups, but being a customer is a nightmare if you want to use the website for actual banking. So why do tech companies use Silicon Valley Bank in the first place? Is their marketing just bluster?
We asked Kirsty Nathoo, the CFO of Y Cominbinator, for a counterpoint. Is there any reason why startups should be using SVB? She says that Silicon Valley Bank is used to dealing with startups, which is helpful since startups are sometimes non-traditional in their banking needs:
SVB has a big startup presence and in terms of getting accounts set up, understanding startups and their needs, being as flexible as they can be (within the confines of the banking regulations and old-school risk averseness of banking institutions) they are good with startups.
Moreover, she makes the point that, while SVB has a terrible website, pretty much all banks in general have terrible websites:
I think that the founders are so tuned into UX [user experience] that they feel it badly with SVB. However dealing with other business banks and their websites, I would say that, in my experience, nobody else is particularly any better. In my opinion, the site does what you need to do (eg initiate wires, check balances, transfer money, FX), but it just doesn't look great and everything takes more clicks than it should.
Having used other business banking websites, this author can confirm that they’re all pretty tough. So SVB has a pretty bad set of online banking capabilities, but is anyone better?
A good time to be SVB
Silicon Valley Bank is a constant presence in the Bay Area "startup scene." Its employees attend all the right events, and the bank is a perennial sponsor of cocktail parties and startup events. Given how many startups bank with SVB, it seems like this startup-centric marketing works.
Yet tech founders hate being customers because SVB’s website appears to be abysmal for online banking, which is pretty important in the year 2014 for a company that specializes in serving the tech industry.
All is not rotten about SVB though. They seem to provide a high level of service, and founders rave about the people that work at the company. Jonathan Friedman of GetScale aggregated the feedback that YC founders left about working with Silicon Valley bank and looked at the complaints as well as the praise. He found that while 97% of founders were unhappy with SVB’s website, 91% of them were happy with the bank employees they dealt with face-to-face or over the phone.
Friedman suggests a more appropriate tagline for Silicon Valley Bank’s marketing: “Our people are as good...as our website is bad.”