That was quite a weekend. The implosion of Silicon Valley Bank set off panic about the fate of tens of billions worth of deposits and, by Saturday morning, it looked like the broader U.S. financial system could be on fire. Then on Sunday, Treasury Secretary Janet Yellen and other top regulators announced a series of backstops that calmed the markets. The crisis has passed—for now at least.
As for who caused this mess in the first place, there are plenty of potential culprits and, for once, crypto is not to blame. You can point to the failure of regulators for failing to spot the systemic risks to the banking system caused by the sudden end to near-zero interest rates. Or you can fault CEO Greg Becker and other execs at SVB for pursuing a growth-at-costs strategy that now seems remarkably ill-advised.
These are both plausible explanations but, if you want to know how SBV collapsed so suddenly, look in your pocket. As much as certain people contributed to the SBV mess, it is primarily technology—namely cell phones—that was the immediate cause of the bank's downfall.
As a number of people have observed, the bank run that took place at SBV last week was very different from previous ones. You've probably seen photos of bank runs from earlier eras: People standing in long lines outside a bank branch, waiting frantically to yank their deposits. That world is no more.
When customers learned that Silicon Valley Bank was in trouble, they didn't rush to see a bank teller. Instead, they mashed "withdraw" on their mobile phones, whisking away billions in a few hours. As macro-analyst Jim Bianco explained in an astute Twitter thread:
"How did $42 billion get withdrawn Friday alone without thousands in line? Answer, your phone! This is not the Bailey Savings and Loan anymore. This should scare the hell of bankers and regulators worldwide. The entire $17 trillion deposit base is now on a hair trigger expecting instant liquidity."
Welcome to a bank panic in the age of Venmo. What used to take place over days or weeks now occurs in minutes—leaving bankers and regulators barely enough time to make sense of what is going on, let alone react to it. I don't know what the answer to this is. Perhaps it's some sort of circuit breaker that slows down the pace of app-based withdrawals when things are going haywire. But in any case, as Yellen and her colleagues hunker down to figure out who to blame for the current bank crisis, they had better come up with a plan for the new technological elements if they want to avert the next one.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
