Slow business account opening process prompts greater attention from Central Bank

Slow business account opening process prompts greater attention from Central Bank

NASSAU, BAHAMAS — The Central Bank says that it will seek streamlined customer due diligence for micro-and small businesses after a survey revealed that only one-third of business accounts were opened within two weeks or less, with 40 percent taking more than a month to be opened. 

The findings were revealed in a Central Bank survey on account opening for businesses, which was undertaken in October 2022.

The survey comprised business owners from 19 different industries, with the majority, 65 percent, located in New Providence, and 44 percent of participants indicated that they were the sole proprietor and operator of their business, while 39 percent revealed that they employed between 1 and 10 employees. 

“As to the outcome, about 86 percent of the respondents disclosed that they were successful with their transactions. Based on the analysis of how long the process took, indications are that approximately six percent of applications were still actively awaiting decisions after more than 6 months of efforts, while about three percent of application efforts were terminated after the applicants withdrew their requests,” the Central Bank stated.

“Indications are that averaging over all of the time intervals used for responses, taking the midpoint of each time band as the average for the range, the average wait time to get an account opened was over two months. In particular, only one-third of accounts were opened within two weeks or less. Within this subset, only about 11 percent of account openings were concluded on the same day, while almost the same fraction opened within one week. On the other hand, about 40 percent of accounts, in absolute time, took more than one month to be opened.”

The survey also indicated that roughly four-fifths of respondents either agreed or strongly agreed that it took longer than expected to successfully open an account.

“A greater fraction of respondents expressed dissatisfaction, compared to some level of satisfaction in the identified aspects of the account opening process; whereas between 15 percent to 25 percent of survey participants had a neutral perception of the process. In particular, just over one-fourth of individuals felt some degree of satisfaction with the length of time it took to open accounts, as compared to almost two-thirds who were dissatisfied to some degree. In addition, almost one-third of respondents were satisfied with the level of responsiveness shown by the banks, as compared to about 45 percent who were not satisfied. In regards to the overall customer service experience, 31 percent were satisfied or somewhat satisfied with the overall service experience, compared to 45 percent who expressed some degree of dissatisfaction,” the regulator noted.

The Central Bank noted that the survey highlighted some key areas that can be improved in the service levels offered by banks and the ease of opening business accounts. 

“As to the impact of anti-money laundering (AML) risk management policies and procedures, while all financial institutions are required to have effective and robust systems in place, in line with Financial Action Task Force (FATF) recommendations, tailored risk-based approaches should help ease the burden imposed on some relationships. In particular, while enhanced due diligence and increased documentation requirements ought to be imposed where the risk associated with the potential relationship is higher, simplification is merited when the risk associated is assessed at lower levels,” the regulator noted.

The Central Bank said it would, therefore, target improved outcomes in this space, including streamlined customer due diligence for micro and small businesses that are more closely aligned with the applicable guidance for establishing relationships with individuals.

Outside of the improved application of risk-based customer due diligence, the Central Bank said it will also pursue and promote the implementation of more effective systems for front-line staff within financial institutions.