Silicon Valley Bank’s collapse emphasises the significance of social media due diligence, where online rumours, uncertainty and chatter can quickly lead to ruin.
It is clear that social media, although creating much in the way of growth and opportunity, presents a new set of risks for banks and financial services, particularly in terms of reputation and liquidity. The most recent example of this is the fall of Silicon Valley Bank; taking place over barely two days, the institution suffered from a bank run, occurring when a large number of customers withdraw their deposits from a bank at the same time.
Stemming from rumours amongst venture capital firms, and swiftly making its way to social media and online communication platforms, influencers acknowledged the potential ramifications of not withdrawing funds from SVB, quickly conjuring a negative perception of the bank that rapidly spiralled out of control and lead to the bank run.
Although heralded as ‘the first Twitter-fueled bank run’, it is clear to see the impact of social media on the perception of banks and financial systems. The spread of false information can occur far quicker than ever before, leading to panic among customers who fear that their deposits may be at risk. An example of this can be seen from way back in 2008, when Washington Mutual collapsed after months of reports indicating deep financial difficulties, instead of a merely couple of days.
Social media also plays a massive role in amplifying negative through the proliferation of negative experiences, complaints, and criticisms, eroding customer confidence and resulting in disastrous consequences. For example, in 2011, Bank of America faced a public relations crisis after introducing a new fee for debit card usage. Negative sentiment about the fee spread quickly on social media, leading to a massive backlash and a significant drop in the bank’s stock price.
With that said, through proper due diligence and awareness of issues facing them, banks and financial institutions can effectively address risks and take proactive steps by incorporating an effective social listening strategy. It has never been easier for negative chatter to take hold, and so company’s and business must ensure they are effectively and robustly monitoring social media platforms for any negative sentiment, rumours or complaints, allowing rapid response to consumer concerns before they escalate into something far greater.
Gaining effective insights and analysis has never been easier; Social360 provides the valuable analytics reports, social listening tools, sentiment analysis, and research you need. For more information, please contact Alex Baker or Giles Brown or visit our website – www.s360group.com.