Bank runs in the digital era

Bank runs in the digital era | FT Alphaville

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"One critical difference with a traditional bank run is that, in a digital run, the money presumably stays within the banking system, but is moved to another bank."

From "Bank runs in the digital era | FT Alphaville".

I hadn’t really thought much about this. In an old-fashioned bank run where panicked customers storm bank branches to demand to demand their cash and the contents of their safety deposit boxes — as happened last week in west London, for example, when rumours about the stability of Metro Bank spread from an anonymous source in Slough to depositors who had apparently never heard of the Financial Services Compensation Scheme (FSCS) — the money may re-enter the banking system, it may end up under mattresses or re-invested into Bitcoin or something. But a digital bank run is different.

(If I heard from someone in Slough that Barclays was about to go down, taking my overdraft and mortgage with them, I might well log in and transfer the £47.23 in my Barclays Rewards account to the safe haven of Nationwide or via Transferwise to my US Simple account. I certainly wouldn’t be arsed to catch the bus into Woking town centre and get in line to draw out the cash.)

The main point of that Alphaville article, though, is something really rather interesting. In the future, when thanks to Open Banking,

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