It’s been a turbulent week in the technology and banking sectors following the collapse of both Silicon Valley Bank (SVB) and Credit Suisse.
The IOE&IT Daily Update here digests what’s happened and two other key developments from the tech world.
SVB bail out
The tech sector’s bank of choice, SVB, last week collapsed, forcing the US government to bail it out, with HSBC buying its UK arm, reports Techtarget. SVB was the 16th largest US bank before its collapse, specialising in financing and banking for VC-backed technology companies.
A lack of asset diversification was thought to be the main cause behind the collapse, leading to a run on the bank. According to the FT, the bank was overly reliant on “carry trades” to make short-term profits and held too much of its balance sheet as government bonds, which have declined in value.
Credit Suisse
The fall of SVB triggered a wave of turmoil in the banking sector, with Credit Suisse in particular exposed and seeing a steep decline in its share price.
UBS agreed to buy Credit Suisse for just $3.25bn after a frantic weekend of negotiations brokered by Swiss regulators to safeguard the country’s banking system, reports the FT.
Opinion is divided as to whether a new financial crisis could ensure, but investors and customers have been “spooked”, according to the Guardian.
Central banks act
Six central banks, including the Bank of England, are to boost the flow of US dollars from today to try to stabilise the markets, reports the BBC.
Stock markets have fallen sharply since SVB and Signature Bank collapsed in the US last week.
European and Asian shares fell on Monday, including a 7.1% drop for HSBC in Hong Kong, while the European Stoxx 600 banking index fell more than 3%.
TikTok ban
In non-banking related tech news, the government has brought in an immediate ban on the use of the Chinese-owned video app TikTok on ministers’ and civil servants’ mobile phones, in line with restrictions introduced by the US and the EU.
In a statement to Parliament, Cabinet Office minister Oliver Dowden said there “could” be a risk to how government data and information is used by the app, reports Sky. TikTok requires users to give permission for the app to access data stored on the device, which is then collected by the company.
Dowden said: “Restricting the use of TikTok on government devices is a prudent and proportionate step following advice from our cyber security experts.”
TikTok said it had begun work on “a comprehensive plan” to protect European user data, including storing UK user data in its European datacentres and introducing independent oversight, reports the Guardian.
A government spokesman told Politico that it would keep its TikTok account open and the ban does not extend to officials’ personal phones.
Microsoft incorporates AI
Microsoft is introducing productivity-boosting artificial intelligence (AI) to its software programmes including Outlook, PowerPoint, Excel and Word, reports CNN Business.
Microsoft 365 users will soon be able to use what the company is calling an AI ‘Co-pilot’ which will help edit, summarise, create and compare documents. This will also include transcribing meeting notes during a Skype call, drafting suggested replies to emails and creating PowerPoint presentations.
According to the BBC, the tech being deployed by Microsoft in Office365 is based on the same language-learning model as ChatGPT.
Meta boss Mark Zukerberg has also singled out AI as essential for its development, putting it ahead of the ‘Metaverse’ when discussing the technologies with the most importance to the firm’s future growth, reports the FT.
