Chase Bank is in receivership because of Chase Bank, not social media

It has been yet another interesting week on the ‘Twittersphere’, with reports about the simmering woes at Chase Bank being shared widely.

With the messages came a series of reactions, including a press statement by the Central Bank of Kenya on April 7, 2016, announcing that Chase Bank was going into receivership. It reads in part:

Chase Bank Limited experienced liquidity difficulties, following inaccurate social media reports and the stepping aside of two of its directors. Consequently, it was not able to meet its financial obligations on April 6, 2016.

There were mass withdrawals from the bank following the messages, which spread rather overtly on Wednesday.

Different schools of thought have emerged on the role of social media in the ongoing woes at the bank, culminating in its coming under receivership. 

From the statement above, and reactions from various quarters, special blame is being assigned to the “inaccurate” reports that spread like wildfire on social media. Is social media, however, the culprit?

We have to acknowledge that human beings will likely never suppress the urge to listen to a juicy piece of information, be it fact, rumour, speculation, opinion, misinformation or disinformation.

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While these can be malicious and outright harmful, they are irresistible. Given that the ‘Chase Bank reports’ are coming hot on the heels of the Imperial Bank saga and a growing distrust of institutions, the consequent reactions should hardly be a surprise.

ACTORS WERE UNPREPARED

There are hard lessons here, for Chase Bank, the Central Bank and all organisations and individuals, on crisis management in the era of social media.

First of all, information will always flow, regardless of platform or tool. Any piece of information considered shareable will gain audience - be it through word of mouth, smoke signals, ravens, WhatsApp, Twitter, or whatever communication tools people will be using in future. How accurate such information is often secondary.

In this social media age, even those doubting the credibility of a ‘scoop’ often still pass it on, with disclaimers like “as received”, to inform recipients that the actor is merely a messenger, and not the scoop’s originator.

To try and curb the flow of information is to, very likely, tread in censorship. Understanding that information will flow is an uncomfortable pill to swallow, but one that we must, nonetheless.

Second, you must always be prepared to address information, misinformation, disinformation, leaks, rumours or any speculation that has a direct impact on your individual or organisational reputation, or that will affect anyone to whom you bear a duty or responsibility. 

In this case, the actors were unprepared; there hasn’t been a persuasive counter-narrative to calm customers and the public. I’m not sure there would have been one either, given that the cat was out of the bag. 

An information asymmetry had already been created, tipping the scales of narrative “control”. Put differently, as Brad Phillips says, “you need to be prepared for today’s media culture, in which a tweet can become newsworthy and a news interview can become tweet-worthy.” 

REALITY IS MORE BLURRED

Social media’s role in this crisis has been to accelerate the revelation that all was not well at Chase Bank, as was later confirmed. As the Central Bank Governor has been quoted saying: 

Social media was a trigger that saw Chase Bank fail to meet obligations, but there were concerns.

To spend time assigning blame to social media would be to miss the forest for the trees. All was not well at the bank, and these platforms have hastened the revelations, at a cost.

The inevitability of the crisis, as a result of the bank’s actions, should have been anticipated and managed, with clear communication to the bank’s clients.

This is not to exonerate any irresponsible social media use where it has happened, but to shift the discussion from one of outright blame, because the reality is more blurred than that.

Let us now have a conversation, on social media and elsewhere, about our banking industry. Other banks will do well to reassure their clients on the safety and security of their institutions, and be prepared to answer any questions and concerns arising as a result.

At the end of the day, what we’re really having is a crisis of faith in institutions to which we entrust our finances - indeed our lives and wellbeing.

Honest, transparent information flow will go a long way towards remedying the shocks. “The secret of crisis management" Andy Gilman says "is not good vs. bad, it’s preventing the bad from getting worse.”

Twitter:@NiNanjira