The COVID-19 pandemic has wreaked havoc on economies around the world, decimating gains earned after the 2009 financial crisis and destroying economies that were already behind. The offshore banking sector isn't doing so well, either.
When it comes to offshore banking, it seems that COVID-19 has caused a sort of natural selection among banks that haven’t already employed features designed to emphasize client experience. Perhaps one of the best things offshore banks can do is to provide online services, such as the digitization of banking services. This shift seems to be essentially mandatory if offshore banks want to stay relevant during the COVID-19 pandemic.
If offshore banks refuse to adapt, they will lose and essentially fail. One example of this that we have seen in recent history is in terms of Swiss banks.
COVID-19's Impact on Offshore Banking: Case Studies
Case Study #1: Switzerland
Switzerland took a major hit in the 2009 financial crisis, a hit that was still being felt ahead of the COVID-19 pandemic. Needless to say, when COVID-19 struck, Swiss offshore banks were not ready for the disaster that would ensue. For instance, revenue margins had already fallen from 97 to 80 basis points in 2019. Wealth managers are seeing turbulent market swings impact revenues and cash components have risen. Margins are stuck perilously at lows right now, and one of the major themes that has underscored the essential tanking of Swiss offshore banking comes in the resistance to digitization. Even if the market was in a better situation, Swiss offshore banks would still likely lose out because they are not adapting to the world around them.
Consumers have been quite clear, and now, perhaps more than ever, digitization isn’t just a convenient; it’s a necessity.
Case Study #2: Cyprus
While Swiss offshore bank accounts have tanked, other markets are doing better. For example, digitization in Cyprus has led to major shifts there. Offshore banks in Cyprus noticed that competitor banks and mobile banking were gaining traction and responded. For example, the Bank of Cyprus partnered with IBM to design and rollout a digital transformation. Offshore banks in Cyprus are reaping the rewards for shifting to online banking and leveraging fintech. Now, during COVID-19, this transformation is being demanded more than ever before.
So, right now, banks are being faced with a double whammy. First of all, they are being hit by the financial impact of COVID-19, and secondly, they are being forced to make a digital transition due to consumer demand. Offshore banks that refuse to adapt are going to pay the price.
Digitization is Mandatory
While many industries have made digital transitions quickly, banking is one of the slowest industries to make the change. The good news is that fintech is on the rise, with promising new technology such as blockchain coming to the forefront.
Offshore banks are quickly leaning to digital banking with branchless banks and online apps. Many of the top rated offshore banks currently are offering digital banking. With fully digital banking, clients can take advantage of the services found in branches through online apps. Video banking, for instance, is an immersive feature found in some digital banking platforms.
Many offshore banks are offering customer service training for their reps that centers around offering digital solutions to clients. At the end of the day, this specialized training makes it so that customer service reps are able to offer world-class care to clients based on a digitized foundation.
Takeaway
Technological innovations are defining fintech. Some of these include blockchain, AI, chatbots, and internet of things. All of these come together to yield amazing opportunities for offshore banks who are ready to provide the best service for their clients through the channels in which they demand. Enhancing the client experience is exactly what 2020 is about.
Even in the face of one of the worst economic disasters of our time, people are still flocking to offshore banking. No, it’s not quite as simple as it once was thanks to restrictive regulations, but offshore banking still offers a way for people to stow their money outside of their domestic economy. In some cases, offshore banking can provide a way to reduce tax liability for individuals and corporations.
There are many, many benefits of leveraging offshore banking in a wealth management strategy, but you’ll only want to stow your cash where you know it’s safe and where you can access it quickly.
In 2020, clients like you are looking for amazing experiences, and offshore banks are acting quickly. For the ones who choose not to, the future is bleak. The good news is that for you - the consumer - a more broad offering of digitization should be on the horizon.
If you’ve been looking for an offshore bank in a secure jurisdiction that offers convenient, safe digital access, then 2020 just might be your year.
SEP
2020
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