After an internet-fueled run collapsed Silicon Valley Bank two months ago and shook the industry, bankers bolstered social media risk management, monitoring, and emergency protocols.

According to seven banking sector executives and analysts, executives in boardrooms across the US are formulating strategies and plans to address cyber dangers like rumors about the banks’ health that could cause deposit withdrawals or stock losses.
The unreported efforts demonstrate banks’ urgent need to adapt to changing times, prevent depositors from starting a bank run, and block short sellers from attacking their shares online.

After tweets questioning SVB’s financial health caused concerned clients to withdraw $1 million per second before the bank fell on March 10, lenders are evaluating social media’s role as a danger rather than a marketing benefit.

“Social media risk was primarily reputational, but now it has led to deposit flight risks, which are existential,” said Sumeet Chabria, founder of ThoughtLinks, a bank consulting and advisory firm.
Silicon Valley Bank’s former CEO, Greg Becker, blamed “unprecedented” social media for the lender’s failure. In 10 hours, SVB depositors withdrew $42 billion; he told the Senate Banking Committee on Monday.

SVB’s rapid decline shocked investors. The lender announced selling securities and raising money on March 8. Bay Area tech clientele tweeted their concerns and withdrew payments via mobile applications or online banking as fears about its financial health grew.

Two months later, former First Republic Bank CEO Michael Roffler blamed social media for its bankruptcy.

“It has been a wake-up call for some smaller lenders who are now working on updating their emergency response and risk capabilities, along with business continuity plans to tackle this threat,” Chabria said.
Regional bank officials who requested anonymity said their directors had instructed their institutions to incorporate social media into risk-management procedures.

One executive added that risk departments “have been pulled in to detail a plan which allows banks to measure internet-related risk, prepare for it and respond to it,” one executive added.