Insights

Financial mis and disinformation can rapidly destroy institutions that take years to build. The speed of social media and the ease of online banking mean that false narratives around the solvency of a bank can go viral and trigger a large-scale customer response.

Case Study: Metro Bank

In 2019 a false story was spread via Whatsapp within the Tamil community in West London, claiming that Metro Bank was facing financial difficulties and may be shut down. As this continued to spread rapidly, queues started to form outside branches, of customers fearful of a collapse wanting to move money out of their accounts, or empty their safe deposit boxes. Many photos on Twitter show crowds of people waiting in line at various branches.

Metro Bank representatives quickly came out with statements refuting this, saying “We’re aware there were increased queries in some stores about safe deposit boxes following false rumours about Metro Bank on social media and messaging apps, there is no truth to these rumours and we want to reassure our customers that there is no reason to be concerned." However recent news stories, which may have been twisted on social media, about the financial regulator raising concerns about accountancy errors in bank reports, and that Metro Bank had miscalculated how much capital it needed to back up its commercial lending operations, fuelled the narrative.

The bank has not commented on how much was removed as a result of the messages, however the company’s share price fell 9% when the markets opened the next day, despite the mis/disinformation being contained to a relatively small group. The increasing speed of social media and ease of online banking mean that narratives such as this may go viral even more quickly, and can trigger larger-scale customer responses.

Case Study: Silicon Valley Bank - the first social media fuelled bank run?

SVB was the second largest bank failure in the United States. The largest was Washington Mutual Bank in 2008, when $16.7 billion was withdrawn over the course of 10 days, in comparison a reported $4.2 billion was withdrawn from SVB in just 24 hours in March 2023. Congressman Patrick McHenry, chairman of the US House Financial Services Committee, referred to the turmoil as, “the first Twitter fuelled bank run.”

The speed of social media and the ease of online banking mean that narratives around the solvency of a bank can go viral and trigger a large-scale customer response. After SVB’s announcement of a decision to raise funds through a sale of shares, triggering online commentary such as Silicon Valley investor Jason Calacanis tweeting “YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW” in a tweet that has had more than 4.9 million views. In the absence of a counternarrative from the bank, customers relied on online information, spreading panic throughout social platforms on talk of a bank run, resulting in a self-fulfilling prophecy.

How can we counter financial mis/disinformation?

In order to effectively counter financial mis/disinformation, we need a clearer understanding of the key vulnerabilities that may be targeted for individual banks and broadly within the banking sector. This requires an in depth understanding of the following:

• What are the key beliefs and who needs to hold them for banks to function?

• Which subsets of consumers are most susceptible to believing mis/disinformation?

• What would be the most damaging narratives and how might they spread?

• What size bank runs may cause bank failures?

Once key vulnerabilities are better understood, the next step would be to identify the key channels to monitor, broken down by customer segment, the key words/phrases to monitor based on the vulnerabilities identified, and any key threat actors or known networks that may have incentives to create or spread financial disinformation. Targeted monitoring dramatically increases the likelihood of early detection of disinformation narratives, providing valuable time to design and implement an effective response strategy to maintain customer trust.

What do effective short term response campaigns to counter specific emerging threats look like?

Prebunking or inoculation can be used as an effective tool to build resilience to information threats. Prebunking interventions targeted around the key beliefs and at key customer segments identified for individual banks (or within the banking sector more broadly) can strengthen beliefs and reduce the susceptibility to mis/disinformation, hence reducing the likelihood of loss of trust and subsequent potential for bank runs.

In the longer term effective media literacy initiatives are critical to build societal resilience to mis/disinformation and shift beliefs and behaviour.