Table Of contents
Overview 1
Catalyst 1
Summary 1
Methodology 1
Executive Summary 2
Many of the offshore clients of banks in the islands are British, and they are generally risk-averse individuals 2
Offshore clients are looking for the basics from their banks and are expected to maintain a defensive stance going forward 2
Manx bankers need to focus on brand, image and reputation and defensive products in order to attract and retain offshore clients 2
Table of Contents 3
Table of figures 4
Table of tables 5
The Islands' and the IoM's Offshore Clients 6
A significant number of clients of banks in the islands and the IoM are from Western Europe, especially the UK 6
The three island centers service a very Western European offshore clientele 6
IoM focus: the IoM has a wide spread of clients 6
Britons are very important to the island banks, but not uniformly important 7
IoM focus: the IoM has a much wider spread of clients 8
Historic links with Hong Kong make this region particularly important to banks in the islands 9
IoM focus: Australians are well-represented among the Asia Pacific client segment 9
Offshore clients are banking on the islands because they get a more personalized service than they would onshore 10
UK clients that bank n the islands are attracted to the region because they get a more personalized service 10
IoM focus: the IoM clients seem to be more motivated by tax avoidance 11
The average portfolio of an offshore client is very conservative in nature, and this is not expected to change much going forward 13
Cash and near-cash is the most important asset category in the portfolios of offshore clients of banks in the islands 13
IoM focus: the IoM clients are particularly heavily invested in cash and near-cash 13
Offshore clients of banks in the islands are expected to make small adjustments to their portfolios going forward 14
IoM focus: the portfolios of offshore clients of banks in the IoM should show very little change 15
Offshore clients are unlikely to move center or bank and have little appetite for risk 16
Offshore clients of banks in the islands do not seem prone to switching 16
IoM focus: IoM clients have fairly low levels of product knowledge and understanding of risk and return 16
The appetite for risk among offshore clients has dropped and is unlikely to recover much going forward 18
Offshore clients of banks on the islands tend to be self-made individuals 19
The single most important source of wealth among offshore clients is business and entrepreneurship 19
IoM focus: most of the IoM clients have sourced their wealth through earned income 20
The Competitive Environment in the Islands and the IoM 22
Offshore clients in the islands are looking for the basics from their banks 22
Offshore clients place a great deal of importance on the brand, image and reputation of providers when deciding who to bank with 22
IoM focus: IoM clients are particularly focused on excellent customer service and brand, image and reputation 22
Tax prosecutions and amnesties are not the major reason why offshore clients might leave their bank 24
Change in personal circumstances is the number reason for client defection from their bank 24
IoM focus: change in personal circumstance is also identified as being key in the IoM 24
Offshore clients of banks in the islands are relatively light users of online services 26
Offshore clients do not make intensive use of online services from their bank 26
IoM focus: IoM clients have embraced online services a little more than clients of banks in Jersey and Guernsey 26
Island bankers think that their clients will be looking for low-risk products in two years' time, and that the greatest opportunity lies in discretionary asset management 28
The expectation is that offshore clients will still be looking for products and services geared towards wealth preservation in two years' time 28
IoM focus: deposits and savings and financial planning should see strong demand from IoM clients in two years' time 28
Discretionary asset management is seen as the best way for banks to attract new offshore business 30
IoM focus: discretionary asset management will also be key on the IoM 31
For basic accounts, offshore clients are interested in one key feature: high interest rates 33
High interest rates are very important both for savings and deposit accounts in the islands 33
IoM focus: offshore clients of banks in Mann have a number of key interests when looking at savings and deposit accounts 34
Strategies for Success in the IoM 37
Offshore bankers identify customer service as being key to keeping clients 37
Datamonitor has identified eight key strategies that IoM bankers should pursue for success in their marketplace 39
Strategy one: excel at customer service 40
Strategy two: improve brand, image and reputation 40
Strategy three: provide a range of defensive products and services, but try to move clients on from basic products 41
Strategy four: offer competitive interest rates, and (again) try to move clients on from basic products 41
Strategy five: address the gaps in knowledge among your client base 41
Strategy six: be as international as your client base 41
Strategy seven: understand the source of clients' wealth and cater to it 41
Strategy eight: recognize that online services are important for some clients 42
Competitive Analysis: The Offerings of Offshore Banks on the Isle of Man 43
Bank account excellence is an essential feature of an offshore bank offering 45
The banks have a patchy record when it comes to their multi-currency offerings 45
Some have competitive interest rates, others do not 46
The product and service offerings of the selected Mann banks are fairly narrow, pointing to real market opportunity 47
Relationship management is on offer to the wealthier clients or those with more complex needs on the Isle of Man 48
Technology excellence is a potential differentiator for forward-thinking banks 49
Appendix 51
Definitions 51
Domicile 51
Offshore 51
Tax amnesty 51
Methodology 51
Further reading 51
Ask the analyst 51
Datamonitor consulting 52
Disclaimer 52
List of Tables
Table 1: In terms of assets under management, approximately what percentage of your offshore clients live in the following regions? 7
Table 2: In terms of assets under management, what percentage of your Western-Europe-based clients live in these countries? 9
Table 3: In terms of assets under management, what percentage of your Asia-Pacific-based clients live in these countries? 10
Table 4: Thinking about your clients living in the UK, what are their main motivations for putting money offshore? (Choose top three reasons) 13
Table 5: What percentage of your offshore client base's assets under management is allocated to the following five asset categories today? 14
Table 6: What percentage of your offshore client base's assets under management do you expect to be allocated to the following five asset categories in two years' time? 16
Table 7: On scale of 1-4, please rate your offshore clients in terms of the following attributes (1 = very low, 4 = very high) 18
Table 8: On a scale of 1-4, please rate your offshore clients in terms of their appetite for risk (1 = significantly lower, 4 = significantly higher) 19
Table 9: Around what proportion of your offshore client base in the islands accumulated their wealth through the following means? 21
Table 10: Why did your offshore clients choose your bank? (Choose top three reasons) 23
Table 11: What are the most likely reasons for offshore clients to leave your bank? (Choose top three reasons) 26
Table 12: How often do most of your offshore clients use your online services? 27
Table 13: On a scale of 1-4, please rate the following products and services in terms of expected demand from your offshore clients in two years' time (1 = no demand, 4 = a lot of demand) 30
Table 14: Which products and services are most likely to attract new offshore business to your bank? (Choose top three products and services) 33
Table 15: What deposit account features will be most important to your offshore clients in the next year? (Choose top two features) 35
Table 16: What savings account features will be most important to your offshore clients in the next year? (Choose top two features) 36
Table 17: What is the best way to ensure that your offshore client base keeps its wealth with you offshore? (Choose one) 39
Table 18: Characteristics of offshore clients of banks in the IoM and suggested strategies for targeting them 40
Table 19: Five offshore banks located in the Isle of Man were selected for a peer review 44
Table 20: There is plenty of variation in the account offerings of the offshore banks 45
Table 21: The Isle of Man offers fairly high rates on some accounts 46
Table 22: Highest earning offshore no-notice accounts, May 2010 47
Table 23: Highest earning offshore notice account interest rates, May 2010 47
Table 24: The product and service offerings of the selected banks are very narrow 48
Table 25: Relationship management services are selectively provided 49
Table 26: Most banks provide client information online as well as some additional functionality 50
List of Figures
Figure 1: In terms of assets under management, most offshore clients of banks in the islands are from Western Europe 7
Figure 2: In terms of assets under management, most Western-Europe-based clients of banks in the islands live in the UK 8
Figure 3: In terms of assets under management, most Asia-Pacific-based clients of banks in the islands, , live in Hong Kong 10
Figure 4: UK clients place their money in the islands' banks because they receive a more personalized service than from onshore banks 12
Figure 5: Offshore clients' assets under management in the islands are weighted towards cash or near-cash products 14
Figure 6: In two years' time, cash or near-cash products will be the largest asset category within the portfolios of offshore clients of banks in the islands 15
Figure 7: Banks in the islands rate their offshore clients very highly in terms of their intention to keep their assets under management offshore 17
Figure 8: The risk appetite of offshore clients of banks in the islands is not expected to change much in the next two years 19
Figure 9: Business or entrepreneurship is the single largest source of wealth among offshore clients of banks in the islands 20
Figure 10: The most important factor in offshore clients' choice of bank is brand, image and reputation 23
Figure 11: The most likely reason for offshore clients of banks in the islands to leave is changes in personal circumstances 25
Figure 12: A significant proportion of offshore clients of banks in the islands never use online services 27
Figure 13: In two years' time, offshore clients of banks in the islands are expected to show strongest demand for capital-protected funds or bonds 29
Figure 14: Discretionary asset management is expected to attract the most new offshore business for banks in the islands 32
Figure 15: A high interest rate is the deposit account feature expected to be most important to offshore clients of banks in the islands 34
Figure 16: A high interest rate is the savings account feature expected to be most important to offshore clients of banks in the islands 35
Figure 17: The best way for banks in the islands to ensure their offshore clients keep their wealth where it is, is to provide superior service 38