How Will Banks Ensure Cash Availability in the Wake of Natural Disasters?
Banks are focusing on maintaining access to cash during crises, refining their business continuity plans, and diversifying cash reserves to ensure liquidity in disaster-hit areas.
Recent events like hurricanes Helene and Milton highlight potential vulnerabilities in banking infrastructure — especially when power and communication systems are disrupted, leading to limited access to banking services. As the prevalence of natural disasters continues to increase, banks face new challenges in maintaining cash availability and operational continuity in the aftermath of these storms.
Financial institutions are rethinking disaster preparedness plans to serve local communities better during crises. A primary focal point? Cash availability. “Our overriding focus related to natural disasters is that we are an essential business, so we must provide services to our customers,” Teri Williams, president and COO of OneUnited Bank, tells The Financial Brand. “In other words, we cannot close. At the same time, we must focus on the safety of our employees and customers.”
As banks work to protect physical and digital access to financial resources, they can draw on lessons from past disasters to strengthen business continuity plans and develop new strategies to ensure cash is available in times of need.
Challenges Banks Face During Natural Disasters
When natural disasters strike, banks face multiple challenges that can disrupt their ability to serve customers. Infrastructure damage, such as power outages, communication breakdowns, and physical destruction to branches or ATMs, often limit access to banking services. However, banks aren’t without resources to find the help they need to service customers. The government and other financial institutions often work with banks in affected areas to maintain operational continuity.
“U.S. banks have consistently demonstrated their ability to collaborate during tough times, and we saw this at work following the events of September 11, where banks operated without traditional credit and liquidity lines, primarily through the Federal Reserve’s interventions,” Sankar Krishnan, executive vice president for banking and capital markets at Capgemini, a multinational technology services and consulting company, tells The Financial Brand.
Krishnan notes that past disasters like Hurricane Katrina and Superstorm Sandy provide insights on how banks can face these challenges. In both instances, banks coordinated with the Federal Reserve to deliver cash to needy areas. Regulatory bodies, like the FDIC, waived certain restrictions to allow more flexible access to funds, and other banks provided loans and liquidity. These efforts highlight the importance of emergency protocols for cash access and delivery during a crisis.
In the immediate aftermath of a disaster, quickly mobilizing cash reserves and adjusting operations can make a significant difference in supporting recovery efforts and maintaining customer trust during critical times.
Strategies for Ensuring Cash Availability and Business Continuity
Banks use several strategies to ensure cash availability and service continuity in response to natural disasters. Providing access to alternative channels like ATMs so customers can still withdraw cash even in areas where branches are temporarily closed is a crucial strategy.
Williams highlights how OneUnited Bank’s protocols are designed to provide cash access when branches in affected areas are closed. “Our customers have access to over 100,000 surcharge-free ATMs nationwide to access limited funds during a disaster.” However, Williams notes that if local ATMs are compromised or customers need more funds, alternative solutions like their bank’s person-to-person payment service, Money Moves, and other digital tools like CashApp and Venmo can provide temporary support.
Liquidity management is also crucial. “Natural disasters often decrease deposits and destabilize banks, making access to cash critical,” Matt Johnner, president and co-founder of BankLabs and Participate, and board director at Encore Bank, tells The Financial Brand. “The challenge is to avoid concentration risk — having all your eggs in one basket — so banks need flexible tools to manage liquidity across multiple areas, even when digital infrastructure fails.”
Banks are also rethinking approaches to storing physical cash and deploying it quickly to disaster zones. “While we continue to witness the growth of a “cashless” economy, it remains extremely important for banks to maintain a ‘strategy’ for addressing physical cash shortages in their role as liquidity providers and to have emergency protocols in place to serve both banked and unbanked individuals during challenging times, such as natural disasters,” Krishnan says.
Banks can reduce dependence on any single location by diversifying cash reserves storage across regions and creating proactive liquidity management strategies to quickly deliver cash to needed areas, from mobile ATMs to armored off-road vehicles. This approach helps banks meet customer needs for physical cash, even in areas severely impacted by natural disasters.
Strengthening Business Continuity Plans
Natural disasters aren’t going away, so many banks are working to strengthen their business continuity plans (BCP) and disaster contingency plans (DCP) to ensure operational resilience. The unpredictability of these events, such as Hurricane Helene impacting western North Carolina, highlights the need for banks to update and test disaster protocols regularly. In a talk earlier this year, Acting Comptroller of the Currency Michael Hsu said U.S. banking agencies are exploring baseline operational resilience requirements in the increasing threat of cyber-attacks, natural disasters, and other disruptions.
OneUnited Bank takes proactive measures as it operates in regions prone to hurricanes, earthquakes, and nor’easters: “Our protocols include monitoring weather up until the day of the expected event (nor’easters and hurricanes), having disaster recovery kits in all of our offices with necessary supplies, and being able to redirect our work to locations that are not impacted by the natural disaster. We have Call Centers in Miami and Los Angeles, which help us redirect service delivery,” Williams says.
One critical aspect of strengthening BCPs and DCPs is preparing ahead of time to ensure financial liquidity during a crisis. “We emphasize ‘building a roof before it rains,’ helping banks prepare for natural disasters through proactive liquidity and risk management,” Johnner says. “Banks increasingly use data-driven modeling systems to predict deposit behavior and track cash flow trends during crises. These systems, combined with robust communication networks, allow banks to coordinate with partners and adjust liquidity in real time if infrastructure fails.”
Beyond assistance from governmental agencies like the Fed and FDIC, collaboration between other financial institutions can help ensure banks meet the needs of affected communities. “In disaster-hit areas, where credit demand surges, banks can leverage loan syndication and participation networks to expand lending capacity,” Johnner says. “By partnering with other institutions, banks can sell or share loans, ensuring liquidity to meet local demands while reducing concentration risk.”
Proactive Planning Before Disaster Strikes
As natural disasters become more frequent, banks must continuously refine their disaster strategies to ensure cash availability and operation continuity. Leadership buy-in and participation are critical. “The number one lesson we have learned is that leadership needs to be present through the disaster. It makes a big difference to staff and the community if the bank’s leadership is present,” Wiliam says.
Prioritizing liquidity management through business continuity and disaster plans can help banks better serve their communities and maintain stability after natural disasters, supporting customers when they need it most.