At risk of sounding like another yawn worthy ‘what has changed five years on from Lehman Brothers’ blog, we thought it would be interesting to explore how the biggest banking collapse in living memory might have played out in today’s world of social media.
Sure, an unnerving lack of internal and external communications may have helped fuel the collapse of the investment bank, but 2008 was a time when hashtags could be misconstrued as the latest smoking craze amongst suburban youths, and an API was more likely to be confused with an exotic derivative. In 2008, it was traditional media that ruled the roost in financial services, well, just about.
This was a period where the minds of the press were racing faster than Dick Fuld on a million dollar speedboat. Journos across the globe waited anxiously, pens poised, for the latest announcement from the US Federal Reserve. And the ‘will they won’t they?’ possibility of a bailout for Lehman seemed to last an eternity as Bernanke, Paulson, Geithner and co. held the financial fate of millions in their hands.
How times have changed. Today, Twitter is a primary source for news before it breaks. Unfortunately however, it is not necessarily the greatest tool for making sense of what is being said.
When it comes to something as complex as the sub-prime mortgage collapse, where even those with a rudimentary knowledge of financial services would be unlikely to know the difference between a CDS and a CDO, information broken by a medium such as Twitter could easily have been misunderstood, or the source misinformed. In the case of Lehman Brothers, would trending topics or messages such as ‘BofA is going to buy Lehman Brothers,’ have changed how investors reacted? Or would a ‘@Bernanke backs Barclays bid for Lehman Brothers’ tweet have prevented already nervous investors from pulling their money sooner? Imagine if the BofA acquisition of Merrill Lynch was rumoured over Twitter ahead of time?
Granted, it is always difficult to predict how markets would react, but in an era where more firms are embracing social media analysis as part of long and short term trading strategies, it is hard to imagine Twitter not having some impact, if not just for the sheer speed of which it communicates information. Twitter serves up a constant stream of updates as situations progress. The good news is that the overtly vocal nature of Twitter means other people, often working in comms, tend to immediately correct these errors, which would have been important in the case of Lehman Brothers.
As many still struggle to fully comprehend the events of 2008, it’s hard to imagine how, from a communications perspective, Twitter would have made life easier for those taking the decisions that changed the world. This is not to say that Twitter is without its benefits. Indeed, more and more firms are finding new ways to accurately separate credible data from the general social noise. One thing’s for certain, firms in the financial services arena can no longer choose to ignore the influence of Twitter as a part of their communications strategy.