Accessibility, flexibility and convenience are the three attributes of offshore banking that have made it popular over the years. Contrary to popular belief, offshore banking is not an exclusive entity for a minority of affluent persons and corporations. In fact it is a service accessible to the average working class person and businessman and the polarized concepts that have developed between offshore and onshore banking over the past few decades are diminishing.
Ensuring the protection of their clients and building consumer trust are the cornerstones of today’s offshore banking sector. Reduced minimum account balances, services that are free of charge, as well as a myriad of services and account opening procedures that are professionally described and displayed via the internet, assist in clarifying how accessible offshore banking has become. The prospective customer just needs to look for the offshore bank with the fees, charges and services that are most suitable for their profile, financial necessities and objectives.
The offshore market offers many advantages in tax savings and asset protection. Thanks to these services, thousands of people living in countries fraught with political, social and economical difficulties are granted the opportunity of depositing their wealth into banking institutions located in countries where they are reassured about the security of their funds. Offshore banks provide soundness of mind to many of those who are concerned about the safety and increased value of their investments. The possibility of receiving high yields on one’s offshore deposits are widespread due to the many tax privileges of offshore banking such as tax holidays, less severe government interference and lower operation costs. With these factors offshore banks increase their capacity to offer high rates of interests on deposits including minimal or zero charges on certain products.
The expansion of major banks that have set up networks of offshore branches, subsidiaries and head offices all over the world presents a clear image of the extent of the industry, its capital worth and dynamism. Offshore banking has enabled many banks to explore new areas where they are able to grow by accessing a wider market, particularly if the possibilities of further expansion in their countries of origin have diminished or grown slim. Through international offshore banking, a bank can specialize in and provide an increased number of tailored facilities and products as it becomes more cognizant of global markets, patterns, economies and sociocultural factors that influence the exchange of goods and services in different areas. This enables offshore banks to accommodate progressively complex business transactions and demands. Offshore banks that successfully broaden their scope in this manner furnish clients with a confidential and ethos-driven banking platform that puts international investment opportunities and options within the reach of the client. In short, in international offshore banking the advantages are mutually satisfying for the bank and the consumer.
Internet or online banking is an integral part of offshore banking as it fulfills the fundamental purpose of ensuring that account holders are able to conveniently consult account balances, contact the bank and make online transactions such as transfers or payments irrespective of day or time. From the onset of the 1990s, online and other technological developments in computer software and hardware, telecoms and information technology shaped both the structure and way in which financial services were provided to consumers. By the end of that decade the new technology had radically influenced most aspects of banking.
As an industry which is almost entirely dependent online banking for maintaining contact with its customers, offshore banks, despite being geographically distant, enable customers to access banking products and facilities irrespective of time and place. Online banking has fostered the automation, alacrity and uniformity in communications and internal management which promote reduced costs by being a substitute for front desk banking functions. International transactions are accelerated through accessible and internationally connected computer network systems which allow data to be transported and transmitted between offshore banks and their customers.
The types of accounts offered at offshore banks cater to clients needs and include an extensive variety of deposit, investment, trust and brokerage including private, personal and corporate banking accounts. With the use of these accounts, performing multiple transactions whether as a tourist, expatriate, international voluntary worker or entrepreneur is made simple and convenient. It is clear why the offshore banking industry has become one of the major players of the global market, investment patterns and capital flows.
Studies show that about 40 to 50 percent of the world’s funds are held in offshore accounts. Sums amounting to trillions of dollars are placed in jurisdictions such as the Cayman Islands representing US$1.7 trillion in deposits, while Switzerland is reported to hold 35 percent of the world’s private wealth. In the British Dependency of Guernsey, for example, offshore deposits amount to GBP 3 billion and accounting for 60-70% of the island’s economy. At the end of March 2007, deposits in Isle of Man increased by GBP6.56 billion to GBP45.95 billion. The global offshore banking sector is thus a multi trillion dollar industry that simultaneously accomplishes the dynamic function of facilitating international trade and commerce and serving as a massive and secure reservoir of global wealth.
The current global financial gloom highlights the necessity of securing diverse ways and means of protecting assets and securing a steady and reliable source of returns on investments. This can only be effectively achieved by scouting the possibilities of not only spreading funds in various onshore banks but by considering offshore banking as a positive and sound option. For those persons who are unable to visualize themselves as being actively involved in this type of banking, opening an offshore account will surely constitute a brave bold step and require the strength to tear down all psychological barriers of being incapable of entrusting personal and or corporate assets to an offshore bank. After all, the facts and figures demonstrating the worth of the international offshore banking sector is proof of the millions of people who opted to make that bold leap continue to assert cross-border financial freedom and independence that offshore banking allows for.
(c) Caribbean Land and Property December 2008