By NEIL HARTNELL
Tribune Business Editor
BANK of the Bahamas International's managing director yesterday said its business e-commerce platform had the potential to "equal" the contribution its loan portfolio made to its bottom line, telling Tribune Business the facility was expected to be "profitable from year one".
Paul McWeeney, explaining that the initiative was designed to "recalibrate" the bank's balance sheet given the high level of credit delinquencies experienced by Bahamian commercial banks, said electronic banking could lead to the entire credit process for Bahamian consumers becoming fully automated.
And, to assist this, Mr McWeeney suggested that the National Insurance Board (NIB) become "the official record of employment" for the entire Bahamas. With NIB confirming a person's job and salary, and the proposed credit bureau effectively supplying 'a credit rating' on borrowers, he said the Bahamas would have the two independent institutions essential to supporting automated retail credit.
Bank of the Bahamas unveiled its e-commerce platform yesterday, and Mr McWeeney told Tribune Business: "This is a major part of our growth strategy to recalibrate the bank's business model to better suit the business environment. It's part of recalibrating the bank's balance sheet, and is a major part of the bank's electronic banking strategy."
Mr McWeeney has long flagged that Bank of the Bahamas International was targeting electronic banking as a means to diversify its revenue streams into volume-driven, fee-based transactions. This is also designed to act as a counter to the problems encountered with the high level of loan defaults in its credit portfolio.
The Bank of the Bahamas International platform enables Bahamian businesses, who have their own websites and an account with the bank, to receive Bahamian dollar payments via credit card from customers through a secure facility.
Effectively, the facility will act as a clearing and settlement house for the e-commerce transactions, with fees based on the type of business a company conducts, plus the volume and size of transactions. Mr McWeeney described it as "a universal type fee platform".
"We know all our existing client base is signing up for it, and we have several hundred merchants [clients] right now," Mr McWeeney told Tribune Business. "We're confident it's going to do well.
"It's so hard to judge how well, but in the US no less than one-quarter of transactions are done online. I think it has tremendous upward potential."
Given all the work done previously on electronic banking by Bank of the Bahamas International, Mr McWeeney said the costs incurred in launching the e-commerce platform were "already built into the infrastructure", effectively making the service an "add on" to what it currently provided.
"We're fairly confident that over the last two financial periods, ending this year, we've done what is necessary to recalibrate the bank's balance sheet," Mr McWeeney told Tribune Business.
"It's volume driven fee income, and calibrating your balance sheet to better withstand the realities of the future, the new norm, less dependent on credit. You have a more diverse revenue base to build income on."
When asked about the contribution the e-commerce platform, and the bank's electronic thrust generally, would make to Bank of the Bahamas International's net income, he replied: "It has the potential to become equal to that of credit. We expect that the product line will be profitable from year one."
Expanding on the possibilities offered by electronic banking, Mr McWeeney said it was possible that the "retail delivery of credit" - extending loans to Bahamian consumers and households - could become fully automated "in a fairly short period of time" outside of the origination (application) process.
This, he added, was "within reach" and could make the whole process "much more efficient" and of "a higher quality", paving the way for developments such as online signatures, code encryption and the establishment of credit limits per product.
Key to going down this route, Mr McWeeney added, was proceeding with plans to establish a credit bureau in the Bahamas and other supporting institutions.
"'I've not gotten a lot of support on this, but I see no reason why the National Insurance Board can't become the official record of employment for the country," he explained to Tribune Business.
"If you provide the information to them, like a person's salary and income, you have the ability to get accurate information on what they earn. You have a lot of cases of fraudulent job letters floating around.
"Cash flow is the main thing, and a credit bureau would give you a credit rating. Now you would have the two primary, independent components of retail credit and can introduce automated mechanisms for, and to support, that."