if the internet goes down for an extended period of time how would it impact banking? Would banks be able to operate like normal?
In: Economics
Banking would slow down considerably if there were widespread Internet outages. There are very few businesses that could operate normally without any access to the Internet.
Keep in mind that the Internet isn’t one thing, it’s a big distributed network of computers. While an individual might lose Internet access from time to time, the whole Internet isn’t down, they just lost access.
Banks typically have multiple redundant Internet connections plus private networks, so they’re not as susceptible to outages that individuals and small businesses might experience.
Files are delivered every day between institutions and processed. Basically everything would stop working overnight. Many places have hard lines that are not technically the internet. If these are still working I guess life could go on. But even then the branches couldn’t connect to the mainframes.
Break out the US Robotics modem.
For my last employer it was literally true. Not a bank, but a loan servicer.
This does truly depend. Banks would probably be thrown for a loop but most if not all can operate without Internet for local accounts. I myself have run credit cards the old way (an impression machine) and I am not that old. My neighborhood gas station actually still runs credits cards the old way. It’s a bit shady, NGL. I suspect banks would take a tougher view on signatures and id during such a time, and deposits like paychecks would take a long time to clear but you would most likely be able to deposit and withdraw cash, and write checks that would be honored at the same bank, at the very least. I have experienced this twice during hurricanes (Sandy knocked out power for three weeks in my city) and the banks stayed open, but more rigorously checked everything and lines were long. Keep in mind, the internet is fairly new. I believe at this stage we still have people who can deal with banking sans internet, and in the event if a truly catastrophic event that knocked down the internet for a foreseeable period of months, there are most likely protocols in place that will be familiar to all but the youngest members of society. This possibility, of course, will wain with age, and it is a very interesting problem that we face as we plunge deeper into the digital age. There is most likely a point of no return. Have we passed it? I don’t think so, but I do think that, God willing, I will live to see it
If you don’t include private leased lines in the internet, and you really shouldn’t as they are pretty much entities on their own, one thing that would keep functioning as normal, is trading on the stock exchanges in the USA (and many other countries as well).
There are high speed private networks between the stock exchanges and major banks, decoupled from the internet, so the “internet” dropping out would not impact that.
For many exchanges, if you want to be a directly trading member, it is even mandatory for your organization to be connected to the exchange network through such private lines, not the open internet.
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