Offshore banks are continuously evolving their product and service offerings to try to ensure they provide the perfect fit to expatriates' needs
Ever since British army officers, reduced to half-pay during a lull in the Napoleonic Wars, discovered they could legally avoid Mr Pitt's newfangled income tax by going to live in the Channel Island of Jersey, offshore banking has meant a good deal to expatriates.
If there is a downside to entering the world of the 'expat,' for even the most courageous and adventurous, it is that it usually condenses several of the most stressful lifetime events into a single short period.
But on the plus side there may be huge tax advantages and opportunities that arise from being able to manage your finances outside your home territory. The biggest mystery is why relatively few expats ' less than one in three at the latest count ' take advantage of this special expat status to manage, protect and grow their finances.
Evidence suggests a key factor behind this low take-up is an understandable reluctance to disrupt established banking and investment adviser relationships. For some this may be coupled with a fear of the unfamiliar, perhaps even slightly 'risquÃ©' (in their eyes) reputation of offshore financial centres.
Research also identifies a common characteristic of expats everywhere that explains why they may be reluctant to invest time in making the decisions essential for the management of their present and future wealth. Simply, they are cash rich ' but time poor. So it may not be surprising when more immediate and practical necessities elbow finance out of the way in the list of priorities.
The leading offshore banks seek to combat this with 'recruitment' advertising to this particular affluent expat market. Those banks with a worldwide presence can put in place a variety of improved services that are not only geared to expats' special needs but also designed to help them maximise their wealth during a period of their lives that can work for them financially.
These services are centred on specialist subsidiary banks which are almost always based in reputable offshore financial centres, where regulation ensures conformity with the highest international standards set by leading nations through the UN and the OECD.
Three key banking issues make delivery channels crucial for the internationally mobile market ' and for expats in particular:
Accessibility is easily resolved when the bank is part of a big international group.
Portability is also simply provided. Many working expats find one overseas posting is followed by another in a different country. Starting off with an offshore bank will therefore provide a secure, stable and accessible home for their money that is matched to their needs, regardless of location.
When it comes to control, the biggest single advance is via the internet. Major investments are being made in internet-based banking services specifically for the expat market. Security is assured by the adoption of 128-bit encryption, military-style scrambling of messages from a personal computer to the bank computer in a way that is virtually impossible to break.
The internet enables real-time, online access 24-hours a day to bank accounts and investments. For expats, that ability to log on and access their bank, wherever they are in the world, and at whatever time of day ' regardless of time-zones ' adds an essential element of flexibility. Not surprisingly, in the past two years, the take-up of internet banking by expats around the world has outpaced that of their domestic counterparts by five to one. And when it comes to added value, as the world becomes more open to multi-national business, the offshore banks are extending their services into areas that few high street banks can expect to reach.
Mark Trasler, head of e-commerce at HSBC Offshore, says research among its customers confirms the importance of accessibility. He says: 'To ensure they got it, we introduced a secure message service ' enabling customers to get in touch with their relationship managers to discuss financial transactions or other aspects of their financial affairs by email, in complete security. This service has proved so popular that two out of three internet customers now say that email is their preferred method of communication with the bank.'
As competition intensifies for the growing mass market of internationally mobile individuals, industry players look for fresh ways to differentiate their offering ' and their brand.
Adam Green, senior premier banking manager of HSBC Offshore, says: 'In offshore banking, as in other industries, our customers are demanding greater sophistication from their suppliers ' an ever-increasing range of products and improvements in the services on offer. 'While call centres are a useful fallback in an emergency, there is no substitute for personal contact ' a responsive human being who understands an individual customer's financial needs.'
At the same time, customers are ' not surprisingly ' increasingly conservative when it comes to investments. Green adds: 'This sector of business has been difficult for most players in the recent past with investors deferring their investment decisions.'
Less than one in three expats take advantage of their status to manage, protect and grow their finances efficiently.
Offshore banks must continue to try to recruit cash-rich but time-poor expats.
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