So, I was one of the 55,000 depositors affected by the recent collapse of Chase Bank in Kenya; well it’s not really collapsed, it’s just under receivership because there are people in Kenya allowed to take unsecured loans of KES 7.8 billion – I wonder what it takes to become one of those people.
On Thursday, 7th of April 2016, at around 8:30am, this was brought to my attention by a concerned friend, but I choose not to believe it; after all, the governor of the Central Bank of Kenya had on the previous day stated that there was nothing to worry about.
Well, that was until I couldn’t access my account via the mobile app or the web! I thought of heading to the ATM in my neighbourhood until I saw pictures of them on Twitter:
“Out of Order!”
I spent the rest of the day on the couch: half naked, dazed, unable to think of anything other than my account and money. I looked at the notice the Central Bank had sent around, there was a number on it but it wouldn’t go through despite multiple attempts. I then resorted to calling my dad, as it came to me that I might need a loan at some point, and kept trying to call the number. Nothing.
Rewind to 24 hours before, I woke up and checked my social media, Chase was trending. Apparently the bank was about to collapse. Bag your money as soon as you can seemed to be the general message. I ignored it. This was not the first time I had heard this; in December of 2015, a friend told me the same thing and I moved most of my money then. I wouldn’t be so irrational this time.
A few hours later I walked into the office and my boss was asking if I’d seen the rumours. I said yes, but I told her I wasn’t worried, but just as insurance, I choose to move some of my money onto M-PESA. It worked and I declared to the office: the bank is fine. A couple of hours later, at about 12, the CBK Governor confirms it. I go on twitter to reassure people as well.
So, what happened?
Part of the reason given for placing the bank under receivership was that due to “inaccurate and malicious rumours” on social media, there was a bank run. Of course, the fact that a few directors and groups associated with them got loans of 16.6 billion Kenyan Shillings in three months had nothing to do with it.
In this day and age with instantaneous connections and the ability to reach a large number of people with very little time and effort, what else did the central bank governor expect to happen once the rumours started.
People were already jittery after the fiasco that was Imperial Bank, the governor himself would remember that he had to come out and tell people that there was nothing to fear, their money was safe with banks.
If social media caused a bank run, and therefore caused the bank to close, then I put the blame squarely at the feet of the governor.
In which world, where instantaneous bank-to-M-PESA, and bank-to-bank transfers take all of 5 minutes, do you expect people to wait on an official press conference that no one knows when it’s being released, to move their money?
That’s how long the governor took to address the rumours. Rumours that by this time had gone around the world and come back, literally. The fact that the Central Bank of Kenya took that long to address the rumours led to the bank run.
The press conference on the day of the bank run was the bimonthly press conference to review macroeconomic and banking sector developments in the last two months according to this tweet.
CBK Governor today held the bimonthly press conference to review macroeconomic and banking sector developments in the last two months.— Central Bank Kenya (@CbkKenya) April 6, 2016
It had nothing to do with any bank in particular but that’s not what was going round of social media.
The Central Bank needs to come up with a more efficient communication strategy, Kenyans online, particularly those on twitter collectively known as KOT, have proven time and time again that they will work to counter rumours most vigorously particularly if an official position is given.
Of course, there’s the very unlikely possibility he had no idea about the rumours until he was asked at the press conference. If this was the case perhaps someone there needs to start keeping track of social media.
Side note: I build tools like this in my day job.
The governor, and by extension the Central Bank of Kenya, has a lot of good will (I’d wager he’s one of few government official with such good will) he should use it. The CBK’s Twitter feed should be used for more than just letting people know what the day’s exchange rate is. In fact, this is a lesson for all government agencies.
Interact with us, keep us in the loop and we will counter the rumours for you.