Market forces are driving customers to consolidate their banking relationships, according to Janet Hislop.
The Cayman Islands ranks among the top financial centres in the world. With most of the major banks having representation in Cayman, the banking services market is very competitive. Consequently, most major financial intermediaries like trust companies, insurance managers, corporate managers and fund administrators maintain multiple banking relationships. We believe, however, that the downturn in most world economies, and the subsequent pressure on companies to contain costs, will make it critical for these intermediaries to forge closer links with their bankers.
There are several compelling arguments for strengthening the partnership between financial intermediaries and their bankers. All financial services providers are now being called upon to meet more exacting regulatory standards. This has naturally led to increased administrative costs. Further additions to the reporting requirements of the same providers can no doubt be expected in the future and will again increase costs. It would behoove the financial intermediary to ensure that its clients are not being inconvenienced by costly due diligence `paper chases'.
Additionally, Cayman Islands anti-money laundering guidelines allow banks to rely on certain due diligence conducted by the intermediary. Deutsche Bank follows that best practice as long as the intermediary can satisfy us that it is complying with the laws and regulations of the Cayman Islands to a standard equal to our own. A coordinated approach to the gathering of `know your client' (KYC) information will be a valuable tool in helping financial intermediaries contain their costs while providing an enhanced service to their clients.
Also of concern to clients, as reporting requirements increase, will be the confidentiality of their affairs. Banks that are able to capture and retain KYC information by using electronic data storage systems will be able to add value to the intermediary's service proposition.
Another area in which enhanced efficiencies can be realised, and to which Deutsche Bank is committed, is the ability of banking and investment information to be exchanged electronically directly into the systems of the intermediary. Of course there are any number of book-keeping systems used by the various entities, but if that barrier can be overcome, the time saved in not having to manually enter transactions into a company's accounting system will prove invaluable.
E-banking in general, can offer cost savings to the intermediary. Deutsche Bank Offshore has designed its online banking system, Presto Online, with the intermediary and institutional client in mind. Recent enhancements to the system allow users to store repetitive payments on the system for easy retrieval and transmission, negating having to re-type the instructions each time. Future enhancements are planned and are being driven by feedback from the 1,100 users of the system to date.
In summary, while we believe that market forces are driving consolidation in banking relationships in the future, financial intermediaries have every right to expect their bankers to work in partnership with them and to respond with products and services that will help to resolve future challenges in the industry.
By Janet Hislop
Janet Hislop is head of banking at Deutsche Bank Cayman Ltd.
Tel: (+1 345) 949 8244