But cost is an important factor in the local labour market
The number of employees of Fidelity Group in the Cayman Islands is growing, said the company’s chairman Anwer Sunderji.
“We are growing both in the Bahamas and in the Cayman Islands. We are just experiencing much faster growth in the Bahamas,” he said.
His statements followed an article in the Bahamas Tribune that appeared to suggest Fidelity was growing in the Bahamas at the expense of Cayman, because the bank consolidated certain back office functions in connection with credit card operations, which previously existed in the Cayman Islands, in Nassau.
This has to be put into a proper context, Mr Sunderji said. He said the company experienced significant first quarter growth in the Bahamas, Fidelity’s home market, where its banking operations are three times larger than in Cayman. Given that the company was also growing in Cayman, albeit at a slower pace, the headcount has increased by three in the Cayman Island and by 11 in the Bahamas over the past year.
The faster staff growth in the Bahamas comes in response to local growth but is also a result of the deeper labour pool of a population that is six times larger than that of the Cayman Islands. When back office functions such as credit card support have to be operated around the clock, it is all about economies of scale, Mr Sunderji said, and these are arguably greater in the Bahamas.
“When you are building scale, where you have the largest number of transactions that is where you concentrate the back office,” he said. “We had an independent credit card business in Cayman, we had another one in the Bahamas, fully staffed. It made no sense. So we consolidated our card operations in the Bahamas. It gives us scale and the cost is lower.”
Brett Hill, president of Fidelity Bank in Cayman added that there has never been an emphasis on back office operations in the Cayman Islands. “I should remind you that we had only one person involved with credit cards. Most of the back office functions were always processed outside Cayman.”
Standardisation is also not something that will affect Cayman operations greatly going forward, Mr. Hill said. “We have never had a big back office staff here, so it is really difficult to see how back office functions could really move [out of Cayman].” Despite the standardisation of core banking systems the number of IT people, for example, has doubled because the bank has grown as a whole, he noted.
Explaining his comments to the Bahamas Tribune that costs are higher in the Cayman Islands than in the Bahamas, Mr Sunderji said: “In the Bahamas our cost per employee is 60 per cent of the cost in Cayman. It is a fact.” Because Fidelity has a much larger number of transactions in the Bahamas, it makes sense to scale up the back office services there.
“There is a lot of talent in Cayman, but the population pool is small,” he added. “But I need to emphasise that our headcount in Cayman is actually increasing.” The “notions of retrenchment and down sizing” mentioned in local media “are all mischievous”.
Each jurisdiction is pushing its competitive advantages, but instead of having a detached dialogue about how to improve Cayman’s competitiveness, some of his comments have unfortunately been interpreted in the sense that Cayman is inferior, Mr. Sunderji said. The work permit regime is far more accommodating and crime is lower in Cayman than in the Bahamas, but the cost of doing business is higher and this is a dialogue that needs to be led, he said.
“The irony is that we have not been retrenching staff and we don’t plan to,” Mr. Hill said. “We have also businesses that simply could not move, because we only do it here, for example insurance brokerage, health insurance and pensions.”