Australian bank startups are carefully eyeing developments in the UK where public confidence is being tested in one of Europe's most successful disruptors - Metro Bank PLC.
Metro's London-listed scrip tanked more than ten per cent on Monday after messages posted via the WhatsApp messaging service warned London-based users that the bank was in financial difficulty and might be shut down.
The message was sent through the messaging service on Saturday morning and within a few hours hundreds of customers were queueing outside six of the bank's London branches to pull money from their accounts.
Metro has 67 branches in the London metropolitan region, most of which trade on weekends.
The bank's media unit spent most of Monday answering enquiries about the event, and the remedial public relations appears to have allayed public concern about the institution's immediate financial condition.
There was some recovery in demand for the company's scrip in early trading on Tuesday, with the share price rising 7 per cent.
However, the impact of the malicious rumour that circulated on the Facebook-owned WhatsApp service underlines the heightened risks facing ADIs in the digital age, especially when the business operations are experiencing a bout of underperformance or controversy.
In the last nine months Metro's share price has fallen more than 80 per cent following financial reporting "errors" and a deterioration in its earnings.
The brief run on the bank at the weekend came after speculation intensified last week that the bank would need to raise more capital to support its commercial lending book - the size of which it had previously under-reported in its accounts.
While there is no hiding the fact that the company has been embroiled in reputational and governance challenges this year, the gossip-mongering on WhatsApp appears to have been timed to destabilize public confidence in the bank.
It occurred at a particularly sensitive moment for the bank because on Monday it disclosed to the LSE plans to raise £350 million of equity capital to "support its growth".
Most startup banks in the UK and elsewhere are mostly dependent on external sources of capital when they enter the lending business.
Typically, it can take many years before banks are able to generate reliable flows of capital from their business operations.
A dilemma for new and established banks in the digital age is that the perpetrators of value-destroying rumours on platforms such as WhatsApp are extremely difficult for law enforcement agencies to chase down.
That's mainly due to the special encryption services that the WhatsApp environment supports.
Facebook is already under pressure from the US Department of Justice and Brazilian law enforcement agencies to reform the WhatsApp business, so that the producers of misinformation or "fake news" are less able to manipulate users of the platform.
While the focus of international investigations has been on how WhatsApp is exploited by foreign governments to interfere in another country's elections, Metro Bank's short-lived crisis last Saturday is likely to prick the interest of regulators in a completely new realm of prudential risk.
It should also prompt some serious reflection by conduct regulators across the globe about WhatsApp's utility for people wanting to influence share price movements.
The Times of London observed this week that a string of hedge funds stood to profit from the continuing weakness of the Metro Bank share price.
According to the newspaper, UK and offshore hedge funds have made more than £500 million from shorting the stock in the last year.