How negative social media content undermines trust in your bank

Resolver
February 16, 2024 · READ

What did the Silicon Valley Bank (SVB) collapse teach the banking industry? Nearly a year after the bank’s collapse, regulators are considering mandating social media monitoring. Similar situations hit Signature Bank, First Republic Bank, and several others in the intervening months.

The lesson here is clear: social media risk for banks is both reputational and, potentially, existential. Greg Becker, the former CEO of SVB, attributed the bank’s downfall to social media, testifying that depositors withdraw a staggering $42 billion from SVB in just 10 hours.

A run on trust

Banks big and small are vulnerable in a variety of ways. Leadership controversies, legal issues, data breaches, unethical or non-compliant actions, PR issues, service issues, and historical investments are all risk vectors. Whether social media is the crack in the proverbial dam or gasoline on the fire, it carries an array of risks that can damage reputations, interrupt normal operations, and force you to spend enormous amounts of time and money sorting a crisis.

A single negative customer experience shared on Facebook, LinkedIn, or Instagram can spark an avalanche of negative commentary through pile-on comments—which is then exposed to followers’ entire networks—instantly jeopardizing your credibility.

Given the state of banks on social media last year, financial institutions should be monitoring online sentiment and risk. Said another way, treating social media as a channel to react is a dangerous organizational decision. The earlier your communications and social media team are aware of potential risks, the faster they can assess and act accordingly.

Here are four ways of monitoring social media for reputational risk intelligence:

1. When working capital is a catalyst for stock price

The rumor mill can pose big risks. In the case of SVB, rumors about a bank’s health triggered deposit outflows, which, in turn, weighed heavily on stock prices. Big withdrawals can prompt others following your social channels to short your bank’s stock. While potentially profitable for these traders, the situation can lead to further disaster for your institution.

2. When you’re organizationally reactive

Social media offers the opportunity to connect with your audience and a platform to learn what your customers genuinely want. But always remember, it’s a two-way street. Social media is an exchange, not a soapbox. And it’s also a forum for both positive and negative comments. Followers and lurkers can ruin you just as easily as help you rise.

For risk intelligence to unleash its real power, your social team has to go beyond measuring campaign and content performance, moderating low-hanging fruit for spam, and ensuring their responses to the negative comments they address meet your brand guidelines in terms of voice and tone.

3. When you can proactively manage risk

A robust social media monitoring solution tailored to your business lets you gain a line of sight into emerging threats. More importantly, when calibrated correctly, this can help you assess the danger with higher accuracy and speed. A recent Corporate Leaders’ Risk Study shows that a proactive approach decreases the impact of crises by 40 percent, resulting in less financial damage, lower recovery costs, and reduced strain on your social teams.

4. When customers vent online

Customers want service immediately, especially on social media. Impatience can quickly spiral out of control and veer into harmful language, abuse of users, and reputational damage. Strong procedures for answering customer complaints are essential, as is the need to moderate comments and content that can turn angry and ugly quickly.

Invest in social adequately

Many social media monitoring solutions exist today, but are designed to tally comments, “analyze” sentiment and measure campaign effectiveness. Social media teams, sometimes partnered with communications, are rarely staffed, even minimally, to keep up with the speed of chatter, making it nearly impossible to address the sheer volume of harmful comments—especially those that create a cascade effect of negativity.

 

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