The news: Banks of all sizes in the US are taking a second look at their current approaches to social media and revising their plans to account for a slew of things that can go wrong, per Reuters.
From marketing to threat: When Silicon Valley Bank saw its deposits fly out of accounts after a few influential people caused a social media stir about the health of the bank, regional and even major US banks saw social media in a new light.
What are banks doing? Banks are now calling on their risk teams to build out robust emergency response plans, and their marketing teams to address inaccurate social media posts.
Will regulators take action? The risks of rapidly moving communications are not unknown to regulators. Financial agencies have acknowledged the issue, but it’s still unclear what actions they might take.
The big takeaway: The risks social media poses to the financial sector have quickly made themselves known. But banks are now in a tough place as they try to plan for the future. Anyone can say anything on social media at any time, which means banks must be prepared for runs at any moment. Identifying and attempting to stifle misinformation at the source might be impossible with instant communication. And banks’ need to bulk up liquidity reserves will transform the way they operate—with potentially negative impacts to their bottom line.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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