By Neil Hartnell

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian commercial banks were yesterday urged to move away from a “check the box” approach to account opening as the time taken to establish new local currency facilities for businesses fell by 28.6 percent in the 2024 second half.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, speaking after the Central Bank’s semi-annual account opening survey revealed the time required to set-up new Bahamian dollar business facilities was cut by a whole day in the 2024 second half, said the industry still needs to adopt a “relationship” oriented approach that makes it easier for customers to meet their Know Your Customer (KYC) provisions.

Suggesting that the just-released Central Bank survey, which compared the 2024 second and first halves, is helping to identify “the root causes” of impediments to bank account opening, he told Tribune Business that its publication is also holding banks more “accountable”, helping to improve consumer “trust”, and setting goals for the industry to meet.

However, the Fidelity chief also argued that the loudest critics when it comes to bank account opening delays, red tape and bureaucracy, are likely those who have had to undergo greater due diligence due to the higher risk they present - such as politically exposed persons (PEPs) and industries/companies undertaking transactions that meet the threshold triggering greater scrutiny.

The Central Bank unveiled survey results which showed the account opening time for new Bahamian dollar business accounts fell by an entire day during the 2024 second half, taking 2.5 days as opposed to 3.5 days for the first six months of that year, representing a 28.6 percent decrease.

Similar falls were recorded for new personal Bahamian dollar bank accounts, which saw the time required to open such facilities fall from an average of 3.5 days in the 2024 first half to 2.9 days for the six month period between July and December - a 17.1 percent reduction.

However, new foreign currency business accounts took longer to open in the 2024 second half in comparison to the first, hitting an average 8.6 days compared to 8.4 days. Still, foreign currency accounts for individuals saw the opening time reduced from an average 3.9 days to 3.5 days during last year’s second half.

“With regard to resident applications, most financial institutions continued to report that once all supporting documentation was received for resident Bahamian dollar accounts, decisions were rendered within a week, with one institution indicating same-day approvals,” the Central Bank said.

“Weighted by the share of applications received, the average processing time for local currency applications for individuals fell to 2.9 days compared to 3.5 days in the first half of 2024. Similarly, decisions on local currency accounts for businesses took 2.5 days versus 3.5 days on average in the first half of 2024.

“As for foreign currency applications, although a substantially small fraction of the total average processing times was much longer, these also experienced a shorter wait time in the second half of the year, with the exception of business requests.”

Mr Bowe told Tribune Business that “the benefits of the survey are three-fold”, although he added that it should be extended to measure how effective Bahamian commercial banks are in communicating with their customers about which KYC documents must be provided.

“It makes commercial banks accountable for the timelines to deliver on account opening,” the Fidelity Bank (Bahamas) chief told this newspaper. “What I mean by that is, up to this point in time, what we’ve had was only a ‘he says, she says’ scenario in terms of the customer saying it’s taking too long, and the bank saying there are extenuating circumstances.

“This removes this element of subjectivity. I think it institutes a level of accountability. I think that is always necessary. While I’m not a proponent of greater regulation, I believe there should always be accountability for various aspects of our operations.”

Mr Bowe added that the survey’s findings also show opening Bahamas-based bank accounts is “not taking as long as the naysayers are floating”. He argued that the loudest and most frequent criticisms were likely originating from persons who had experienced delays due to the need to subject them to greater due diligence.

“Their criticisms sometimes ring hollow because they have extenuating circumstances,” he added. “They may be high risk customers who fail to provide the due diligence requirements, or fail to accept they are high risk - don’t believe they are PEPs or in industries that are adjudged to be high risk.

“From that perspective I think a lot of the negative commentary is coming from those that probably have circumstances where there are valid reasons why the account is taking longer to open.”

Mr Bowe said the “third and most important” impact of the survey is that it has “given better direction on the objectives we should be striving for. It speaks to how long people have to wait for approval to operate an account and speaks to the timelines to open an account once all all the documents are received”.

However, he argued that the Central Bank survey needs to be “extended” to capture how effective banks and their staff are in communicating to clients all the documents that are required for the KYC, due diligence and account opening process. This, and the adoption of too prescriptive an approach, was what he identified as Fidelity Bank (Bahamas) greatest challenge.

Mr Bowe argued that commercial banks needed to give new customers “options” for compliance, noting that while a business may not have audited and compiled accounts, it more than likely will have undergone Business Licence verification to determine what its annual revenues are.

“Some of the financial institutions are looking to check the box as opposed to really extending the relationship framework, which says ‘I form a relationship with a customer, I give them the requirements but also options for how to get documents in,” he added.

“I think the survey helps that. If the objective is to reduce the time taken to get an account, we have to look at the root causes. I don’t have empirical evidence, but I would say that the majority of bank account opening failures or delays is financial institutions not advising customers what is required and giving them options.”

Mr Bowe told this newspaper that other “critical roadblocks”, which the industry must solve collectively, is the lack of a standard information sharing mechanism where clients can authorise one institution to transfer key details to another for KYC verification purposes. All banks, at present, have their own KYC “template” and information required by one is not necessarily needed, or is in a different format, to another’s.