A conversation on the Cayman Islands financial services industry with Butterfield Managing Director Mike McWatt

May 26, 2021Blog

By Emma Parker

Butterfield recently celebrated its 54th year of doing business in the Cayman Islands and has delivered consistently strong growth in recent years, even during the pandemic. Following Butterfield’s recent banking centre expansion into Dart Real Estate’s flagship development, Camana Bay, we sat down with Mike McWatt, managing director of Butterfield Group in Cayman, to find out what is behind the organisation’s success.

Managing Director of Butterfield Group in the Cayman Islands, Mike McWatt

EP: Recent financial results have looked good at Butterfield, especially in Cayman. Why do you think that is? What trends are driving growth in the jurisdiction?

MM: The strong Cayman economy has underpinned the growth of Butterfield and the jurisdiction as a whole, and the growth of financial services in Cayman has been particularly important to Butterfield; this drives deposits (particularly corporate deposits), transaction volumes, and foreign exchange transactions for us.  In addition, despite the pandemic, we have a strong pipeline of new developments in Cayman and this has created opportunities for Butterfield in the commercial lending space.  Finally, a strong residential property market means we are having a record year for mortgages underwritten here in Cayman.

In addition, we attribute Butterfield’s success to the strength of our experienced team and the relationship that we have with our clients, advisors and introducers across both our banking and wealth management businesses.

The resiliency of our economy has surprised even the most optimistic among us over the past year. Local spending has expanded throughout the pandemic, development has continued thanks to a thriving real estate market, and we are seeing traction from programmes the government introduced to support the economy – like the Global Citizen Concierge Programme. At Butterfield we supported a similar programme to work remotely in Bermuda, so we were able to roll out the learnings from that in Cayman, including a streamlined onboarding process for short-term residents.

EP: How have Cayman and the financial services industry fared during the COVID-19 pandemic over the last 12 months?

MM: Cayman’s financial services industry has performed very well. Businesses, including Butterfield, had the technology and infrastructure available to enable remote working when required and the implementation was seamless.

Importantly for both our international and local clients, the banking industry stayed open in Cayman. Banking was identified as an ‘essential service’ for our economy and Butterfield’s systems proved robust and functioned effectively throughout our 2020 lockdown period.

Throughout the last 12 months there has been a notable shift among our clients to alternative channels.  Many migrated to online and mobile services, and we had a significant uplift in e-transactions. Going forward, many of our clients are now better able to transact and interact online and the shift to digital banking for many of them will be permanent.

EP: Why do you think Cayman has performed so well?

MM: Cayman was in a good place economically and fiscally prior to the pandemic and this helped us enormously. Butterfield was one of the co-arrangers of a line of credit to the Cayman government by a consortium of local banks. The government therefore had cash available to support the sectors that needed it—like tourism—and to put programmes in place to help those that needed it.

On the financial services side of the economy, Cayman has long been held in high regard as a jurisdiction of choice. During COVID, thanks to Cayman’s stellar performance in controlling the spread of the disease and ensuring business continuity, Cayman has become even more attractive. Cayman has garnered international attention for the way it has handled the pandemic and its reputation as a safe, secure and stable place to be has only increased.

EP: What have financial services firms learned from the COVID-19 pandemic? How can they be prepared to ensure they meet clients’ needs in a changed post-COVID world?

MM: The financial services industry has navigated the pandemic well. At Butterfield, we have learned to be even more laser focused on service delivery to ensure we continue to serve our clients’ needs in a very dynamic environment.

As mentioned earlier, the pandemic has also accelerated the pace of digital adoption and fast-tracked the use of alternative channels for both transactional banking and relationship management.

Post-pandemic, the bar is set high for Cayman’s banks. The jurisdiction is attracting a new profile of clientele with the next generation of clients in the technology and innovation sectors or those relocating to Cayman via the government’s residency programme. These clients are used to a wide range of product choice and first-class service, both in person and across seamless digital experiences. This is the level at which Cayman’s banks have to perform.

EP: What is Butterfield doing to ensure it is set up to work with its clients effectively across digital platforms as well as in person?

MM: We continue to invest in online and mobile banking, and in particular in the safety and security of these platforms. During the pandemic there was a global uplift in fraud – and we will be working to continually educate our clients about security, phishing and other fraud concerns.

We also continue to invest in face to face banking, and most recently we launched an important new location in Dart’s Camana Bay development. This was a strategic expansion for us as many of our clients—especially the law firms, accountancy firms and financial services providers—are there.  As a bank, it is very important for us to have good relationships with introducers, who provide valuable access to our corporate and high-net-worth individual client base.

EP: With the trend for increased HNW relocation to Cayman, what are these new resident clients looking for from Cayman banking and wealth management providers?

MM: We are seeing a younger generation of clients arriving in Cayman, and these “next-gen” clients are more tech-savvy and interested in ESG (environmental, social and governance) strategies. They also expect a wider range of investment options to be available similar to those they would routinely have access to elsewhere.

In line with this growing interest, Butterfield is actively developing its own ESG strategy as a business that will run through everything we do.

EP: What type of products and services do relocating HNW clients require and how has Butterfield been able to meet these needs?

MM: More than anything we see the next generation of clients looking to their bank to be a partner. They demand more than the basic banking experience and expect something more akin to a private banking experience. They are looking for a broader relationship and solutions, not simply transactional banking.

In the Cayman Islands, Butterfield employs over 245 employees across its head office and four banking centre locations at Butterfield Place, Midtown Plaza, Governors Square and now in Camana Bay.  Butterfield offers retail banking—including a strong premium product suite for professionals—corporate banking, trust and fiduciary services, private banking and asset management services.   For more information, please visit www.butterfieldgroup.com.

About the author

Emma Parker has worked with Dart since 2019 and has been writing professionally since 1999. Emma graduated from the University of Manchester with a BA (Hons) in 1997, has a post-graduate Diploma in Communications, Advertising and Marketing and a STEP Certificate in International Trust Management. She has worked in PR, marketing and business development roles, primarily in the legal and financial services sector, since 2001. Emma is the founder of Sidekick, a financial services marketing and business development consultancy. She was raised in the UK and has lived and worked in the Caribbean in the British Virgin Islands and the Cayman Islands for over 13 years. Emma has a passion for exotic travel, her family and Newcastle United Football Club.

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