Flash flooding in Maryland. Wildfires sweeping through California. Hurricanes ravaging Florida, Texas and the Carolinas. Tornados in Oklahoma. The disasters are different in type but the fundamental needs remain the same: food, shelter and of course money.
The availability of money, so often taken for granted, becomes especially urgent when people suddenly have to deal with a tree crushing their house or floodwaters submerging their kitchen. They need cash to gas up their cars, stock up on provisions and pay the contractor who rebuilds their home and businesses.
In fact, people will need their bank more than at any other time. Because when a storm or emergency situation hits—and customers’ lives get turned upside down—cash remains a grounded certainty in a sea of unknowns. Though we take credit, debit and digital payment technologies for granted, they don’t work when stores are damaged and systems down. That’s why most consumers will run to their nearest bank to get cash in worst case scenarios.
“Financial institutions, including banks, need to be responsive to their customers’ significant and urgent needs in the face of natural disasters and other dramatic, unexpected events,” says Mark Hamrick, Washington bureau chief and senior economic analysts for Bankrate.com. “Among the most important things they can do is to be available and flexible with their customers.”
Often, this is where making cash available comes into play. For instance, banks brought in mobile ATMs so customers after Hurricane Katrina and Superstorm Sandy could get much-needed cash. One photo on FEMA’s website shows a red Bank of America truck, looking for all the world like an emergency rescue vehicle, equipped with two ATM terminals.
And when you think about it, “rescue” is just the right word. For in disasters, banks need to make sure cash is available and easy to access. It’s critically important to customers who depend on them to make it through the storm.
Banks can also show empathy when it’s needed most by giving customers a much-needed break on fees. Banks can waive fees for such things as using out-of-network ATMs, non-sufficient funds and late loan payments for customers affected by the disaster. This goes a long way towards giving customers a break when it will the greatest impact.
A banking stress test of another kind
While banks themselves may need to scramble as much as anyone else in a disaster—think of the branch that suffers blown-out windows, for example—they must somehow work overtime to assist customers through tremendous adversity. How banks respond may represent the greatest “stress test” of all.
“Looking at this from a purely antiseptic, business vantage point, the reality is that these customers are extremely stressed—including with their finances as they struggle to get back to normal,” Hamrick says. “So if anything, it’s an opportunity for a bank to demonstrate that they can provide a high level of service by facilitating access to cash or funds, and temporarily waiving fees to help customers get back on their feet.”
Hamrick says “opportunity” because it means serving customers when they absolutely need it most.
“Banks that go the extra distance will ultimately be rewarded by customer loyalty as things return to some semblance of normalcy,” he points out. “Many will do things such as purchase new homes; engage in replacement, restoration and reconstruction; and buy new personal items. Often, economic activity accelerates in an area where disaster strikes as the rebuilding process ramps up.”
Customer service is paramount when it comes to helping victims of a natural disaster, adds Beji Varghese, managing director at management consulting firm Navigant Consulting.
“All banks have to be sensitive to building a long-term relationship with the borrower,” Varghese says. “Because essentially everybody has loans, everybody gets new mortgages and you want them to stay with you. If you treat your customers poorly when they have difficulty, they’re never going to forget that. So from a retention perspective, treating borrowers as part of your community and helping them goes a long way in building relationships—not just with that person, but with the entire community as well.”
Drones in the air, boots on the ground
To be certain, banks know how to ramp up their game for customers in desperate situations—and in some cases, literally rise above.
USAA helped residents of flood-ravaged Corpus Christi, Texas, in 2018 by quickly creating an aerial imagery tool that allowed displaced members to type an address into a web browser to quickly see if their homes were damaged. The tool was also shared with insurance adjusters so USAA could expedite claims and get money more quickly to contractors. The USAA tool was recently recognized as a 2018 BAI Global Innovation Award winner for Societal and Community Impact.
Less than 48 hours after Superstorm Sandy ripped through the New Jersey and caused billions of dollars in damage, a foundation operated by New Jersey-based OceanFirst Financial pumped $500,000 into the New Jersey shoreline. The money went to first responders to make sure they were fed and cared for, says Christopher Maher, chairman, president and CEO of OceanFirst.
“That quick response time—where we could immediately inject money into what was needed in the moment—was incredibly important,” Maher says. OceanFirst employees also made plenty of house calls to customers to help facilitate their insurance claims: another example of how banks can go above and beyond for customers in a disaster.
“If you had a mortgage with us and had a catastrophic incident, then the bank has to sign off on that insurance check,” Maher says. “That can be really hard in a disaster area. We had people call us and they were devastated. They said they had a contractor there, ready to do the work, and had a check from the insurance company, but how could they get it endorsed? We said, ‘No problem, we’ll send someone out this afternoon, we’ll take pictures, we’ll endorse a check and it will be done and over.’”
A bank’s plan for unplanned events
If your bank doesn’t have a disaster plan, get one now, says Jonathan Rowe, chief marketing officer of cloud banking company nCino, based in Wilmington, North Carolina. Wilmington was heavily damaged when Hurricane Florence, a Category 4 monster, smashed into the Carolina coast in September.
“The first thing in disasters, whether it’s hurricanes or fires or winter storms, starts with preparation,” Rowe says. “I think that any smart business needs to have a business continuity plan. It doesn’t need to be an 800-page volume, but it must offer a clear, concise plan for what happens in case there’s a major natural disaster that could disrupt the business.”
Rowe adds: “You really want to focus on ensuring that your employees and their families are safe and employees know what to do in those situations. And secondly, you want to ensure that your business can remain fully operational for your customers.”
And in an age of ever-more-sophisticated weather modeling, banks can proactively plan for disasters using predictive forecasting technology and tools to create “what-if” scenarios and ramp up cash supply to branches and ATMs in affected areas leading up the event.
All told, a swift disaster response can elevate the bank from its everyday role. When all’s well, customers who depend on banks daily often take them for granted. But by getting on the front lines of a disaster—much as police, fire and emergency services do—banks can rise to a higher level. Think of it this way: When a house floods, there’s hardly a homeowner alive who wouldn’t welcome cash to help bail them out.
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Based in Maryland, Patrick Sanders is an assistant managing editor for U.S. News & World Report and formerly worked as an editor for The Associated Press and at newspapers in West Virginia, Connecticut, Pennsylvania and Indiana.