The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The first-ever survey on the ease of opening a Bahamian bank account will separate “myths from realities” with more than 99 percent of applications approved in often “less than a week”.

Gowon Bowe, Fidelity Bank (Bahamas), told Tribune Business that the inaugural half-yearly Bank Account Opening survey represents “a good first step towards building consumer confidence” while acknowledging that the findings showed the commercial banking industry has yet to achieve perfection on an emotive issue for many Bahamians.

But, while it has frequently been asserted that it is far easier and quicker for Bahamians to open a bank account in the US than in their homeland, especially since the 2000 passage of laws designed to escape the Financial Action Task Force’s (FATF) then-blacklist, he also pointed out that “banks are easy targets for criticism”.

The Central Bank, in unveiling its survey on bank accounts opened by six institutions between January and end-June 2024, said that while the number and percentage of rejected applications was relatively low there was still room for “interventions” that could improve customer service and the ease of conducting banking in The Bahamas.

Of the 28,153 new deposit account applications submitted during the 2024 first half, the banking sector regulator revealed that more than 99 percent were processed and approved during this same six-month period with less than 1 percent denied or rejected.

And, once all necessary Know Your Customer (KYC) and due diligence documents were supplied by individual and business applicants, all banks made decisions on whether to approve the requests “in less than a weeK” (see other article on Page 1B).

Mr Bowe, revealing that the survey was produced via a three-way collaboration between the Central Bank, Prime Minister’s Office and banking industry, told this newspaper: “There are myths and there are realities.

“The objective of the analysis intended to be done every half-year is to demystify the myths and focus on the realities. We need to decipher and focus on those areas that need potential change…. I would venture that 90 percent of all accounts in The Bahamas operated by commercial banks are low or moderate risk.”

He added that, by establishing comparatives and benchmarks, standards for the time taken to open bank accounts can be established and the industry held accountable for meeting them.

As an example, the Fidelity Bank (Bahamas) chief executive said that if it is determined a low-risk account should be processed and opened within 24 hours, any institution that fails to comply with this benchmark could then be forced to explain why it is failing to meet these requirements.

“One of the things that the Central Bank identified is why is it so difficult to verify the identity of individuals in The Bahamas,” Mr Bowe said, “meaning if I bring in a driver’s licence you should be able to search a database for my National Insurance Board (NIB) number and passport.”

Noting that account opening applicants are typically asked for two forms of government identification, he questioned why there is no database that links the likes of driver’s licences, passports and NIB numbers so that banks can conduct confidential KYC searches to verify a new client’s identity without compromising confidentiality of their data.

And, noting that approvals for foreign currency accounts lagged those for Bahamian dollar facilities, Mr Bowe added: “There’s still a misunderstanding of liberalization that’s taken place over the years. There’s a belief that non-residents cannot operate an account in The Bahamas.”

Citing the example of foreign second home owners, who may only spend several months per year in The Bahamas but need a functioning local bank account to cover expenses incurred in this nation, he added: “It may need to be an external account operated by foreign currency - a Bahamian dollar account funded by foreign currency.

“The reason why that is set up is you may have local expenses but, so as not to disrupt the foreign exchange regime, this is is why it’s permitted to be funded by foreign currency.” This, Mr Bowe explained, would help avoid a scenario where the foreign reserves were drained by Bahamian dollars going into such an account being converted to foreign currency outgoings on the other side. “There’s been liberalization on that front,” he added.

Mr Bowe said the survey also detected situations where bank policy regarding account openings was not being passed “down the chain” of command. “Meaning the executives and what they knew and believed to be policy of the organization was not getting down to front-line staff,” he explained.

The Fidelity chief also challenged whether it was still necessary to treat sectors such as car and vacation home rentals as ‘high risk’ businesses for bank account opening and monitoring purposes, as the development of electronic payments means they are no longer so heavily reliant on cash due to the evolution of wire transfers, credit and debit cards, and the likes of PayPal.

“The results are fairly consistent with what we know to be the reality for low and moderate risk accounts,” Mr Bowe said of the Central Bank survey’s findings. “The reality for high risk accounts is that there’s more work to be done…..

“I see this as a good first step towards building consumer confidence, not customer or depositor confidence, because there’s now an accountability framework that is prescribed and made public, and people have information on what to expect on a factual basis and are not using one-off experiences to castigate an entire process.”

The Central Bank, detailing the rationale for the survey, said: “Based on past surveys, the average consumer’s primary point of access to financial services is through a deposit account, and more specifically, a savings or checking facility. While the demand for deposit accounts is high, there are lags on the supply side, which have been highlighted in previous surveys of users of the financial system.

“In particular, the Central Bank’s 2022 survey of experiences faced by businesses identifies these as including the average amount of time taken to complete the account opening process, insufficient up-front clarity on customer due diligence documentation requirements, and queuing before initial applications could be submitted.”

And, detailing the objectives, the regulator added: “It is expected to identify operational and regulatory factors that can be targeted to increase the transparency and efficiency of the experience. From a financial inclusion perspective, such insights could also improve the ease of access to transactional services.

“While the survey’s reported average incidence of unsatisfied applications was low, interventions to reduce such experiences by the public could still have meaningful, positive impact on customer services and the ease of banking in The Bahamas.

“Additionally, there is scope within some financial institutions to improve the monitoring of customer services by aligning the institutions’ estimate of the full duration of application processing timelines with the estimates tracked by the public. In particular, some banks do not yet monitor the delays at the onset of applications during which due diligence documentation might be incomplete.”