The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Cabinet minister yesterday warned that “all hands on deck” were required to prevent the further outsourcing of financial services jobs, with this nation needing to improve operating efficiencies and how business is conducted.

Hope Strachan, minister of financial services, said many factors were driving banks to outsource back office functions and processes to lower-cost jurisdictions elsewhere in the Caribbean.

Speaking after Royal Bank of Canada (RBC) last week confirmed it was transferring its Bahamas credit card unit to Trinidad & Tobago, a move that threatens up to 50 jobs, Mrs Strachan said: “The news of any loss of jobs in the Bahamas is never welcome.

“The latest, due to RBC’s transfer of its credit card services to another jurisdiction, is of as great concern as the others that have happened in recent times.”

She added: “There are many factors which are contributing to the continued loss of jobs in the banking sector here in the Bahamas.

“Adherence and compliance to the extremely stringent regulatory environment globally has forced many banks to cancel certain services in some jurisdictions and/or to consolidate and/or amalgamate services between jurisdictions in their efforts to  de-risk or reduce their exposure.”

All three Canadian-owned banks - Scotiabank and CIBC FirstCaribbean, as well as Royal Bank - have sought to cut costs via a combination of branch closures and outsourcing of jobs/back office functions to lower cost jurisdictions such as Jamaica and Trinidad and Tobago.

Although Scotiabank and CIBC FirstCaribbean have both previously told Tribune Business that their consolidation in the Bahamas has finished for the time being, it appears that Royal Bank is still seeking more efficiencies.

It closed the Palmdale branch of its BISX-listed FINCO operation in November last year, transferring all operations and customer accounts to the nearby Royal Bank branch.

This was a continuation of the initiative, begun in 2014, to merge FINCO’s operations and physical locations with those of Royal Bank in a bid to cut costs and generate efficiencies in a difficult trading and economic environment.

Royal Bank has also shrunk its own branch network, exiting its Paradise Island branch last year, a move that it confirmed was intended to reduce costs and increase efficiencies.

Mrs Strachan added that with the ever-increasing obligations imposed by regulatory standards comes an increase in capital investment and human resources for most institutions.

“The profitability of any financial institution is paramount. Many banks have therefore turned to outsourcing certain functions to less costly jurisdictions to protect their bottom lines,” she acknowledged.

“New technology and electronic banking are a blessing and a curse, in that they increase efficiency yet shrink the need for human resources. Moreover, technology means less restrictions on geographic location as a large number of job functions can be performed online from anywhere.

“Given the existing cost factors for doing business here in the Bahamas, our focus must be on mitigation through finding ways to increase operational efficiencies and in changing the way we do business.”

Mrs Strachan stressed that the further migration of Bahamian jobs must be minimised, but said it will take “all hands on deck for a sea change in the delivery of business services here in the Bahamas. The Ministry of Financial Services is recommitted to this cause”.