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Little did I know that I would be involved in the fastest bank run in history. Late Thursday night earlier this month, I received a text message that Silicon Valley Bank (our bank) was on the brink of collapse. I had the message read by him three times and permeated it, then sent some of my own. It quickly became clear what we needed to do. I withdrew all my deposits in a few hours thanks to my bank’s online portal.
After all, I was not alone. I was part of a digital collective that received data at an unprecedented rate and translated it into real-world action at breakneck speed. and collectively withdrew plans of staggering scale. $42 billion in one dayCompare this to the last major American bank crackdown, where customers withdrew $16.7 billion in nine days.
Baked into technology the conditions for creating a digital herd
The difference lies in the 15 years that separate our execution, during which we witnessed the digital services revolution and social media takeover. The first hastened the withdrawal, but the second greatly accelerated the spread of information.As Patrick McHenry, Chairman of the House Financial Services Committee put it, which was “the first Twitter-powered bank run”. A few years ago, I needed an account manager to withdraw a large amount of money from my bank. Today all I had to do was click a button in the app.
In other words, the conditions for creating a digital herd were imprinted into the technology. Until now, the impact on the real world has been mediocre. This time around, we have witnessed how the rapid spread of information can leave our institutions dizzy when they encounter masses of people who have access to the buttons that generate financial activity in the real world.
Bringing anonymous online users to action is the essence of any digital business. Our innovation focus is on leveraging technology to increase efficiency and drive action while shortening the analog path.
In my industry, digital healthcare, I can expect to reduce inequities in healthcare by guiding people through simple digital steps that overcome barriers in the physical world.For example, an app that compares prescription drugs to find the cheapest options available can be very cost-effective for low-income people. 45% of Americans persons unable to use public transportation, or 61 million With just a few clicks, digital health services that allow clinical-level testing at home instead of the doctor’s office have the potential to change lives.
Leading people digitally can bring many benefits to society, but there is one caveat. Instant digital transactions can cause massive social disruption and can easily accelerate collective action with potentially disastrous consequences.
We have seen this devastating effect in elections disinformation campaign Spread like wildfire in 2016 and 2020, with subsequent events led to the January 6 riotsIn 2021, a group of young online investors has demonstrated the power of the digital herd. prey on social media Communicating via memes also used the Robinhood app to boost the stock price of declining video game company GameStop by 400%. This has resulted in the creation and loss of billions of dollars in just a few days. 2022 saw the rise and fall of socially inspired crypto pyramid schemes. media driven hype Frictionless withdrawal mechanism.
The impact of SVB’s banking crackdown on our economy and technology sector is still becoming apparent. But with the humility and hindsight of those who took part in the fastest bank run in history, tech entrepreneurs must recognize the responsibility that comes with the ever-growing digital power.
Today’s technology can help people navigate mountains and rivers without leaving their front door. However, the collapse of the SVB will require us to consider ourselves and our products as responsible digital shepherds and, through our dialogue with regulators, ensure that appropriate pathways and guardrails are in place to mitigate any possible disruptive impact. made it clear that I need to Otherwise, the next time the herd goes out of control, it can have even more detrimental consequences.