across a much smaller client base, the advanced solutions Bermuda’s banks are able to offer is doubly impressive.
As customer preferences continue to shift toward electronic banking, continued investment in this area is a priority for all the banks.
What do you see as other important areas of investment?
All the banks in Bermuda—and banks everywhere—will have to continue to invest in changing client onboarding procedures and documentation, and capital and risk management to meet more stringent and ever- evolving regulatory requirements.
Doing business in an international fi nancial centre such as Bermuda increasingly means complying with reporting requirements and standards from various authorities all over the world.
Are all Bermuda’s banks FATCA-compliant?
Yes. Bermuda uses a model 2 Inter-Governmental Agreement with the US, which means that the banks report directly to the US Internal Revenue Service with respect to the holdings of US persons for whom we provide services.
An early decision by the regulators to adopt model 2 enabled prompt preparations by the banks. We didn’t have to wait for local reporting guidelines to be developed before we could begin designing our internal processes to capture required information, as is the case for model 1 jurisdictions, where information on US persons is reported to local tax authorities for subsequent reporting to the IRS. The banks here had the opportunity to work directly from the US requirements.
Are you seeing a trend away from traditional banking towards online?
Over time demand for, and use of, electronic banking channels is trending upward. The number of transactions carried out in branches is trending downward, but it is still signifi cant and warrants continued investment in, and maintenance of, our branch channels.
What recent developments have there been in banking technology in Bermuda?
Butterfi eld and HSBC both introduced mobile banking apps for smart phones last year, which were enthusiastically received by customers. All the banks have made upgrades to their online banking services over the last few years in response to customer feedback and the need to continually enhance online security.
Feature for feature, Bermuda’s current online banking products compare favourably to anything available in North America or Europe, and in some respects they are more advanced. When you consider that the cost of developing and maintaining online and mobile solutions is spread
In addition to local regulations for subjects such as ‘know your customer’ and anti-money laundering, we are subject to international capital adequacy standards (currently Basel II and working toward Basel III). We now have reporting obligations to foreign tax authorities under US and UK FATCA, and it is likely there will be additional requests from other countries going forward.
Staying on top of and continually tweaking data collection and reporting procedures is now a full-time function within the banks and it will warrant continued investment as a cost of doing business.
There have been calls for a review of banking practices among some interest groups in Bermuda. Do you care to comment on that?
It’s unfortunate, but it seems to be a global phenomenon, that banks become the target of criticism during recessionary times. I suppose it’s understandable given the central role that banks play in the workings of any economy. But having a sophisticated, profi table, stable banking sector is one of the things that will help attract foreign capital to Bermuda and be a key factor in Bermuda’s recovery.
Helping the public and parliamentarians understand that, along with creating greater transparency around how we go about making lending decisions and the costs to provide world-class banking services, is part of the role of the Bermuda Bankers Association.
Bermuda is fortunate to be served by well-managed, well-regulated, well-capitalised and profi table banks. We have a banking sector that employs more than 1,400 people, over 90 percent of whom are locals. We support the functioning of the economy through the provision of services, but contribute even more to the community as an employer and consumer of goods and services.
And by virtue of our capital strength, we’re well positioned to make loans to drive future growth.
63 Bermuda Finance | 2014
SHUTTERSTOCK / HUMANNET
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