Billion dollar weather disasters are becoming more and more commonplace, with 2020 recently becoming the sixth consecutive year to have 10 or more such disasters. Banks in communities affected by severe weather face two challenges: 1). how to operate through the weather event; and 2). how to navigate complex regulatory procedures to balance the best interests of the customers and the institutions.
A bank's response in these situations can have far-reaching implications on bottom-line variables such as customer retention, loan terms, and community engagement. As with most things in life, preparation and planning pay dividends.
Banking regulations and the public trust require institutions to remain operational during a crisis. Doing so often requires quick decision-making and flexibility from one day to the next.
The importance of having detailed response plans in place, revisiting them regularly and holding periodic run-throughs can't be understated. Take these proactive steps to address both safety and regulatory concerns and put your bank a step ahead of the competition when severe weather strikes.
The first priority is always the well-being of employees and customers. According to the Federal Highway Administration, more than 3,400 deaths and 357,000 injuries occur on highways during heavy rainfall . The association also found that 24 percent of weather-related crashes happen on snowy, icy or slushy pavement, while 15 percent occur during a snowfall or sleet.
If severe weather suddenly occurs, it's important to have emergency supplies and on-site shelter procedures in place and ready to go. When you do get advance warning--such as for a snowstorm or hurricane--take the opportunity to stock up on emergency supplies.
Keep water, food, and blankets nearby in case of a power outage to support staff and customers who are unexpectedly stranded at your bank. .
Dangerous weather and safety concerns sometimes necessitate closing a bank branch down temporarily. But the ability to close one branch while keeping nearby locations open with stocked ATMs can be a differentiator in a competitive industry.
For example, in the event of a hurricane warning, both existing and new customers will likely notice which banks are operating (and which are not) along their evacuation route. It may be wise to have lodging available to critical employees outside of affected areas so they can maintain online transactions and ensure business continuity.
After storm and federal disaster area declarations, the FDIC encourages banks to work with customers who are experiencing financial hardship due to the weather event. Whether it's restructuring loans, extending repayment terms or offering favorable Community Reinvestment Act considerations, it's an opportunity to deepen customer relationships and community engagement.
At the same time, as long as good lending practices are maintained, the ability to collaborate with affected customers aligns with the long-term interests of the bank.
Regions Bank did just that, offering consumer relief options to its customers in flood-affected portions of Louisiana and Mississippi during a recent crisis. Regions extended loan deferrals, lines of credit and other options to bank members in each state in need of financial aid to assist in flood recovery.
Meeting customer financial service needs after a disaster is not just a good business practice; it plays a vital role in the community's economic recovery. In addition to working with its customers, banks should also monitor municipal securities and the potential implications to local government projects.
At its most basic, disaster planning is about preparing for something we all hope never happens. More important, it's about responsibly and strategically positioning your bank and its community to thrive after a storm.
For the bank that can navigate the murky waters of financial regulation while staying ahead of dangerous weather, the dividends can be tangible upticks in customer loyalty, new business and overall public perception.
Severe weather can be costly and have a significant impact on your business’s continuity and wellbeing without the right support. The StormGeo Team can help.
Our meteorologists and business continuity experts can help you improve your company’s operations and emergency response planning. Get the most accurate weather data customized to your needs and asset locations so you can focus on making better business decisions on short notice. Reach out to one of our team members to learn more.