REPORT #78 June 1999

Produced by the Belize Development Trust
In the field of seeking diversified economic enterprises for Belize. One would have thought the Government in Belmopan would have jumped on our internet banking updates and discussions of eight months ago, from the Belize Culture List. (To subscribe send a message to: [email protected] and put subscribe in the body of the message.) True, in the spirit of monopolizing telecommunications, it was not financially feasible and so irrelevant to the political party running Belmopan. Still, one would have thought such a potential new business, would have attracted the Ministry of Economics and Finance and they would have had some legislation roughed out, or even passed in the legislature by now, covering the subject. I mean, c'mon mon! They can pass anti-competition protectionist telecommunications legislation protecting the Belize Telecommunication monopoly in a matter of days, or at the most two weeks. Why so much lethargy when it comes to swift changing technological fields, in which Belize stands the chance to get it's foot in the door during early days? Certainly, there has been one, or two enquiries, to the Economic Ministery about the subject, according to people sending me emails of enquiry. They complain of no response to enquiries by e-mail from Belmopan, or typical foot dragging of Caribbean small countries, with wanting investors to come to the capital for "discussions". Balderdash! I say. Put in the legislation and lets get on with it!

Rapid response is not exactly the name of the game with centralized party controlled nations. First the minister's have to figure out how they can make a buck out of it themselves, is the general public opinion. But in this case, a show of iniative, leadership and foresight would be more appropriate. A recent e-mail to me, indicated the Corozal Free Trade Zone will have it's first USA style web server, international phone calls, internet connection availability at the same prices as found in the USA, within about 60 days. That means middle August. One would think offhand, if the Ministry of Economics in Belmopan was really trying to boost new business in Belize, they would be on top of things and aware of the rapid changing technology of banking. Legislation covering internet offshore international banking should already be on the books, or if not so, within these same 60 days, soon as private enterprise has finished installing the infra-structure for telecommunications within the Corozal Free Trade Zone making all kinds of new businesses viable, including offshore international banking.

In this same time period, while our Belmopan masters have been lolligagging around, here are some of the following banks now doing internet banking. BankAtlantic, Citibank, Colonial Bank, First Union National Bank, Nationsbank, Ocean Bank, Suntrust Bank, Union Planters Bank, Washington Mutual. And that is just in my neighborhood of Miami-Dade County. There are a lot of people out there trying to get in early and capture market share of this new attractive service. Funny thing though! While internet banking may now be here. It is not the wave of the future as it was eight months ago, the supposed savings to customers have not yet been passed along.

Here are how the charges go on internet banking from an assortment of banks. Flat fee, for wire transfers $8, you can view all your loans, and investments on-line. Or in another bank you can view just the last 15 bank transactions. Access might be through using the software Quicken, or Microsoft Money. If you don't want on-line bill paying, you can pay just %6.95 a month at another bank. Another place charges to be able to pay bills about $7 but only allows you to pay up to twenty bills owing. After that, you pay $1 each additional bill. If you want access using the software Quicken it costs $10 a month. If you use Microsoft Money it costs $6 per month and $1 for each bill payment over 20 bills. If you have a minimum account size of $5000, then you get all fees waived. Another bank will not allow paying bills via your on-line internet banking, but using Quicken software, or Access software charges nothing for fees if you have a minimal account deposit. There is another software called BankNow. This particular bank will be operating on the internet as of August, about the same timeline it will be ready in the Corozal Free Trade Zone, if we get some legislation passed in Belmopan. In this case, the first three months are free and if you use over eight log-ons to your account after that, you will pay $10 per month. If you have a deposit in some kind of Trust relationship, which probably would be typical out of Belize Corozal Free Trade Zone, then no fees will be charged. Another bank, is giving three months FREE and after that $6 per month fee for unlimited number of account transactions and bill paying. Another bank is not charging for bank transactions, but if you want to pay your bills by internet banking, they are charging $5 per month. If your account is big enough, they will waive any fees.

Some of the international banks are [email protected] based in Alpharetta, Georgia, USA, Security First Network Bank in Atlanta, Compu Bank in Houston, Telebank in Arlington, Va and First International in Indianapolis. You can find any of these on your internet computer in Belize. ( Whoops! I forgot, internet connections in the rural districts of Belize are financially restricted by our Belize quasi government monopoly ) Information is dangerous to politicians and fuedal style government by elected rulers. Got to keep the masses ignorant and a slave captive market.

Current statistics are that 59 % of customers are tracking their bank balances and transactions on the home computer. Compared to 9% of just two years ago in the USA and Canada. There are now 600 banks out of 10,000 banks in the USA now offering internet banking, according to the office of the Comptroller.

There is no question web based banking is going to revolutionize banking. About 40% of USA households now have household computers. In Belize, about 80% of people in business in the country have household computers. Most of these only have e-mail service due to the prohibitive charges by BTL for internet connection. In the USA and Canada, banks report that the future growth for banks will not be in physical structure, but in internet banking. Bank stock prices will probably be influenced with how fast they go into internet banking.

Banking growth in Belize requires a couple of modifications. First and foremost, is that small Belizean owned banks internally need to be covered by some sort of deposit insurance and then allow Belizeans to compete with the huge umberrella banks that practise international banking, by giving small deposit requirements for individual town and village banks. The banking legislation in Belize has to be changed so that International Banks are not given a favored status by making one security deposit, for the central banking facility and then allowing branch banks of much smaller size to operate under this umberralla deposit without local Belizean competition. The rules right now favor only international banks operating in Belize. What is needed, is legislation that makes International Banks operating in Belize with district branches operate as individual holding company banks, and branch banks qualifiying separately as incorporated, but separate financial institutions. The system in use in Belize is the European system and is widely used in all those countries that have been in financial trouble around the countries of the world and for the most part are still in trouble after six years, due to the structure of umberrella banks being responsible for failures of branch banks, within and outside different countries. Making branch banks separate corporations and only able to function on their deposits, or deposit insurance, ensures that any bank failures are not pyramided, as has been the experience in the rest of the world by the main bank. The holding company structure allows for the divestment by bankruptcy of failing banks that are in trouble, without the catastrophic effect of pyramiding failures nationwide, or internationally. It is a swifter, self-correcting mechanism as the USA has shown for times of financial catastrophe and bad management.

Can we get into Offshore International Banking in Belize? Of course, the holdup has been twofold. One was the restrictive telecommunications monopoly, but this problem is going to be solved by developments in the Corozal Free Trade Zone, secondly the problem is lack of initiative and preparedness coming from our rulers in Belmopan. They are slow to prepare for the future and eventuallities. Whether anybody is waiting in the wings to establish an offshore bank or not, the wise course is to have the enabling legislation already on the table. Let's get with it folks! Do your job you were elected for! There is still time, about 60 days.

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