Pub.7 2018 Issue 4

The CommunityBanker 16 Hurricane Maria: 1 Year On, Puerto Rican Bankers Recall A ‘Desperate Time’ By Lindsey White, S&P Global Market Intelligence H urricane Maria laid bare the banking system's depen- dence on telecommunications systems, and showed how unprepared banks were for the sudden disruption in cell service. "The thing that I think surprised most everybody was the communication failure," Puerto Rico Com- missioner of Financial Institutions George Joyner said during an interview in his San Juan offices. "I was here for both Hugo and Georges [massive hurricanes that hit Puerto Rico in 1989 and 1998, respectively]. At that time cellular wasn't such a big component of the telecommu- nications infrastructure." And the industry's reliance on cell service is growing, despite the sputtering infrastructure. Banks in Puerto Rico closed at least 27 branches in the year after Hurricane Maria hit — representing roughly 8% of the island’s total branch network, an S&P Global Market Intelligence analysis found. Some branches closed due to damage. In other cases, banks used the storm as an opportunity to shrink their physi- cal footprint and put more emphasis on mobile offerings. OFG Bancorp, for example, closed a dozen branches, or about a quarter of its network, following Maria. OFG Presi- dent and CEO José Rafael Fernández said the hurricane "fit perfectly" into the bank's digital strategy by driving more customers to start adopting technology. "Maria hit and everybody had to close their branches. There was no electricity, there was no communication, and we had to get branches up to speed as fast as we could. And we did," Fernández said in an interview in San Juan. "But in the process, customers realized that they had to look for fuel, they had to do other more important things than going to the branch, like going to the supermarket … and all of a sudden they started utilizing mobile more." Despite the closures, banks say they remain committed to brick-and-mortar locations in Puerto Rico, where the branch remains a key part of daily life and in-person contact is val- ued among customers. "I visited branches in the aftermath of the hurricane early in the morning," Fernández recalls. One day he went to a branch at around 4 a.m. and found a line of 200 people waiting for the bank to open. Another morning in the early hours, he went into a branch to discover something even more surprising — a bank teller blow-drying a customer's hair. "We had to send an email to all the employees saying, 'Look, blow-drying hair in the branch can break the generator, so please be careful!" he said. 'A desperate time' Even with working generators, there was no getting around banks' inability to provide critical services. A traffic jam in Puerto Rico as people search for cell service in September 2017, shortly after Hurricane Maria hit. Source: Lourdes Aponte Rosario F E A T U R E