|The Bahamas Investor Magazine
January 4, 2007
January 4, 2007
Information technology service providers in The Bahamas, whether they provide software or hardware solutions, are finding that in order to be truly successful, they need to have a solid understanding of the financial services industry as well as provide the latest in technological know-how.
Banks and offshore facilities in The Bahamas, Cayman Islands, New York and even as far away as Vanuatu are utilizing a wealth management software package designed and supported by a small company located in Nassau.
And 14 years after forming his company and first marketing the widely-acclaimed software, Bruce Raine, President of International Private Banking Systems, admits he is still a bit surprised when major international entities inquire about or install the programme he created.
That’s not to say he doesn’t have faith in what they do; rather, it’s knowing that all of his clients have the option of going to a competitor with thousands of programmers on staff.
“I like to think it’s significant. We’re frequently amazed when very big-name companies come and talk to us, but that is now happening on a not infrequent basis, so we’re getting used to the idea. We have some really big-name financial institutions that are talking to us and buying from us.”
The company’s flagship software programme is called International Private Banking System (IPBS) and is described as a fully integrated, Internet-enabled, multiple-entity, multi-currency accounting and management information system that provides all of the front, middle and back office support services required by an international private bank, trust company, mutual fund administrator or other wealth management professional.
IPBS clients can use the entire offering or select only those aspects of the software that are necessary for their operations. It is perhaps because the company is small that they have been able to distinguish the service they provide. Raine recalls that he didn’t even know where to locate Vanuatu on the map (it’s in the South Pacific, roughly 1,100 miles east of Australia) the day he received a call from a potential client.
“He couldn’t find anywhere that he could get the software he needed in a time zone he had any compatibility with. They are 14 hours ahead of The Bahamas, but we realized that if they stayed late and we came early, we could carve out three to four hours in any given day if there was an issue that needed to be dealt with,” he explains.
One of IPBS’ biggest clients is based in New York: Royal Bank of Canada’s capital markets team had a new product to launch, but when it came to looking for the right software solution, other companies, says Raine, suggested they change their business process to suit the existing software.
“Maybe what makes us attractive is that we sat down and tried to understand what the business was and how it had to work and said, ‘OK, we can adapt the software to suit that business,’” he says.
Perhaps what surprises Raine more than the success of his primary product, however, is the lacklustre reception received by another product they designed. IPBS designed a software package to help financial institutions meet the more stringent Know Your Customer (KYC) requirements of the post-9/11 world. The Bahamian firm teamed up with Miami-based WorldCompliance, a global leader in KYC data and information services.
According to Raine, most financial institutions rely on manual referencing, something his team realized was simply too time consuming a task to be effective.
“Just keeping up with the watch lists is a major task,” he declares. “If you’ve got 10,000 accounts, you have to ensure that a client’s name is not on a watch list. If you’re going to try to do that manually—if you could do a thousand names in a month, and scrub your data once a year, which is really not adequate—you’d be doing well. If you’ve got far more clients than that you’ve got a far bigger problem,” he says. In fact, he points to the very real possibility that a client can be checked thoroughly, be deemed a safe risk, signed up and just days later run into trouble. Unless the institution is continuously checking up on its clients, it could be months or even longer before anyone realizes that there is a problem.
A unique feature offered by the IPBS/WorldCompliance programme is that banks no longer have to go on the very public Internet to screen their clients. The WorldCompliance database includes more than 800,000 individuals who have been tagged for any number of reasons, so privacy issues can be put to rest.
Perhaps largely because of the unusually active hurricane seasons of the past few years, a movement is underfoot for financial institutions—whether they are major international retail banks, private trust companies or even insurance brokers and agents—to devise a foolproof disaster recovery plan.
At a recent Bahamas Financial Services Board-sponsored Disaster Recovery and Business Continuity Planning Seminar, the Central Bank’s inspector of banks and trust companies, Michael Foot, advised that draft guidelines for business continuity plans are being created and that Bahamian banks need to have discussions with regulators in other jurisdictions prior to a disaster that would necessitate setting up shop elsewhere.
Marcus Cheetham, president of Nassau-based Southworth Consultants, believes disaster recovery can be big business for Bahamian information technology companies. And he feels the country has the infrastructure, technology and knowledge to look beyond providing the service for just locally-based financial institutions.
As far as he is concerned, there is tremendous potential for The Bahamas to establish itself as a premier site for remote data hosting to be used in disaster recovery plans.
While many of the larger institutions operating in The Bahamas use the disaster recovery and remote data hosting services offered by their head offices, Cheetham says many lack that luxury and still others are looking for additional backup.
Bahamian companies are also well-positioned to provide the service, he points out, because of legislation and differences among jurisdictions.
Financial institutions need to maintain privacy when storing their data either outside their physical offices or in another part of the world. Cheetham says many of his clients opt to store their data with Southworth Consultants in Nassau because they don’t want to risk sending their client’s data to another jurisdiction, making it susceptible to being shared.
For that reason, and because New Providence has historically weathered hurricane seasons without major damage, companies based elsewhere in the world are opting to host their data here.
“The Bahamas is unique. We are sitting here as a totally independent offshore jurisdiction with the technological infrastructure and know-how to safely and privately store just about any company’s data. So long as they can get here or can get to an Internet connection, they can be up and running no matter what they’ve just been through,” he explains.