It was a harsh spring for much of Mississippi and the South. Record-breaking rains led to prolonged, large-scale flooding and substantial property damage, which resulted in multiple counties being designated as federal disaster areas.
Banks in the affected communities faced two challenges: operating through the weather event and navigating 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 anything, 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 Association, 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 occurs suddenly, 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.
Keeping water, food and blankets nearby in case of a power outage can be of comfort if the staff and customers get 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.
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 this, offering consumer relief options to its customers in flood-affected portions of Louisiana and Mississippi. 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.