What Online Behavior Reveals About the Collapse of Silicon Valley Bank
Anomalous patterns of online research indicated a growing concern with SVB before the bank run occurred. Then on March 10, U.S. federal regulators shut down California’s Silicon Valley Bank (SVB), the central lender in the U.S. tech ecosystem, making it the second-largest bank failure in the country’s history. Two days later, New York State financial regulators closed crypto lender Signature Bank.
Diving deeper into patterns of online attention shows what U.S. audiences are concerned with in the aftermath of these events and can help organizations prepare for what comes next. These events, and their implications, are having direct and downstream effects on organizations of all sizes across numerous industries, including the financial, banking, tech, and investor sectors. There is also a broader uncertainty as to whether this is the beginning of a destabilization that may have a wider impact.
SVB Collapse: What Happened?
Since 1983, Silicon Valley Bank provided banking services to tech firms, funding early-stage startups and venture capital that conventional lenders wouldn’t take up. SVB was a banker to nearly half of the United States’ venture-backed technology and healthcare companies that went public over the past two years.
On March 10, the Federal Deposit Insurance Corporation (FDIC) took over SVB after a bank run, prompted by the bank’s effort to offload reserve assets and a plummet in its stock price. The collapse of SVB is the most prominent corporate casualty of the U.S. Federal Reserve’s policy of raising interest rates to reduce inflation, according to FiscalNote’s Oxford Analytica analysts.
Indicators of Increased Concern Before the SVB Collapse
As interest rates rose and venture capital became more difficult to find, some tech startups were already withdrawing deposited funds to provide working capital. FiscalNote’s Predata, a global risk intelligence platform that monitors online attention, observed that research into SVB spiked from English-speaking desktop users multiple times throughout January, hitting a one-year high on March 2 and continuing its upward trend on March 6 and 7, indicating increasing concern with SVB.
This research pattern was unique to internet users on desktop devices; there was no notable increase in research on SVB from mobile devices. Predata’s research has validated that traffic from desktop devices tends to reflect research from older, elite, and professional audiences, while traffic from mobile devices tends to reflect browsing from audiences more representative of the general public. The fact that the uptick in traffic was coming only from desktop computers implied that online attention was coming from a group of people with knowledge about what was going on behind the scenes, while the general public was unaware.
Between February 28 and March 2, then again from March 6 to 8, above-average levels of research into SVB coincided with above-average research into the FDIC. This likely indicates that elite U.S. audiences concerned with SVB were worried that the situation would escalate to require FDIC involvement.
Data Reveals Shifts in Attention Post Bank Collapse
With the ability to identify anomalous patterns of online behavior and examine how attention shifts over time, Predata also shows mounting concerns in the wake of SVB’s collapse. English-speaking audiences began researching other corporate bailouts, past recessions, and global inequality at high levels not seen since the start of the COVID-19 pandemic. “This research pattern may reflect growing concerns about the direction of the U.S. economy,” says Molly Dwyer, vice president of analysis at Predata.
As Silicon Valley Bank collapsed on March 10, English speakers began to increasingly research recession themes including the Great Depression, bank runs, and the 2007-2008 financial crisis — “things that would indicate people are concerned we’re heading toward doomsday scenarios,” Dwyer says.
The next day, global audiences began to research similar themes as a contagion of concern spread. By March 13, English, French, Italian, Japanese, Korean, and Spanish speakers all paid the highest level of attention to recession themes since the March 2020 pandemic lockdowns.
Stay Proactive to Prepare for the Future
Banks and financial institutions facing increased scrutiny might be wondering what comes next and whether the contagion will impact them. During this turbulent time, it’s essential to monitor passive behavior, such as online research, and be notified of any anomalous patterns that surface online before real-world action such as a similar bank run or concerns from clients, investors, and partners.
To help you do this, Predata has the powerful ability to quantify shifts in online attention. This enables government and commercial organizations to better understand and anticipate which banks or industries are in the crosshairs of online research so they can better protect their strategies and operations. The data also helps you react to major events and understand who is most concerned among global audiences.
Predata allows clients to explore shifts in attention on a global scale, uncover indicators and warnings about risk factors, and observe how online browsing behavior changes over time. “We quantify ‘the other side of the internet,’ and our data goes back historically, allowing users to compare what is normal and isolate what is unusual,” Dwyer explains. Historical baselining helps compare different behaviors when something breaks through the norm.
With Predata, staying on top of critical issues has never been easier, providing you with real-time information on what is getting attention from a particular audience and enabling your organization to make timely strategic decisions.