After [interviewing the “younger” generation]( on evolving changes that require strategic differentiation on the part of service providers, the GATEWAY Editor spoke to industry veteran Clifford Culmer of BDO to get a perspective on the industry of “yesterday”.

**GATEWAY BFR:** As a seasoned expert within the financial services industry, you have seen varied changes in the way the industry has been regulated and promoted. Our readers would love to have a nostalgic look at the industry from the eyes of those that have been in the trenches, so to speak. What do you regard as some of the highlights?

**CC:** *Over the past 40 years we have seen the creation of various regulatory bodies that have assisted in the modernization of the financial services industry.
In the 1970s we had the formation of the Bahamas Institute of Chartered Accountants, of which I was a founding member, and it became the regulator for the accounting industry under the Public Accountants Act of 1991. Also in the 1970s, The Bahamas saw the creation of the Central Bank which regulates the banking industry, and maintains monetary stability and also the formation of the Bahamas Bar Association to regulate the legal profession.*

*In the 1990s the Securities Commission came on stream which provides for the supervision and regulation of the activities of the investment funds, securities and capital markets. We also introduced a new companies Act in 1992. In the earlier part of this century the Insurance Commission was created to regulate insurance licensees.*

*In 2012 the Ministry of Financial Services was restored. So now we have a Government agency with a mandate to promote the financial services sector of The Bahamas – in conjunction with the Bahamas Financial Services Board. This shows government’s commitment to assist in growing the financial services sector. As a member firm of an international accounting network, I have also promoted The Bahamas as a centre for financial services.*

**GATEWAY BFR:** Is there one development within the industry that you saw as the turning point?

**CC:** *In my opinion there are two developments particularly worthy of mention.*

*Firstly, the creation of the Bahamas Financial Services Board (BFSB) was a turning point. Before BSFB, each sub-industry of the financial services sector – banking, securities, accounting and insurance etc – were promoting themselves individually. When the BFSB was formed in 1998 it amalgamated all financial services promotional efforts and marketed The Bahamas as a premier financial services hub. With the advent of the BFSB, where I was director for four years, there has been a more concerted effort in promotion of The Bahamas’ financial services sector in its entirety.*

*Secondly, In terms of regulations, The Organization for Economic Co-operation and Development (OECD)/ FATF blacklisting of The Bahamas in 2000 was a major turning point in the way financial services business has been conducted ever since. The increased scrutiny heralded by the blacklisting led to an increase in corporate governance and compliance through the Know Your Customer mandates. That to me was also a major turning point; admittedly, the financial services business was conducted in a less constrained manner, particularly as it pertained to customer information. After the OECD/FATF initiatives, The Bahamas did see some of its financial service companies leave the country, which negatively impacted the contribution to GDP of this sector. The Bahamas has signed TIEAs with several countries in the ensuing years, and this has resulted in even more compliance duties.*

**GATEWAY BFR:** Although the level of contribution has been sustained over the years, there has not been as large a growth as anticipated. Do you agree with some of the pundits that financial services can expand to rival tourism as an economic contributor?

**CC:** *In order to properly diversify the economy it would be optimal for financial services to rival tourism as an economic contributor, but tourism traditionally has had more attention, more promotion and more funding, and this has given it the edge over financial services. The introduction of Baha Mar in late 2014 will probably solidify tourism’s lead over financial services in the near term. The resort has been projected to increase GDP by nearly $800 Million per year, which would equate to an additional 10%, taking into account an $8 billion GDP figure, and if these predictions come to fruition, the introduction of the resort will result in a net increase in GDP over financial services. The financial services sector will require something on that magnitude to rival tourism. Tourism’s contribution to GDP is currently more than double the size of financial services sector. In order to rival tourism, the financial services industry requires much more substance; we need more mutual and hedge funds, more fund administrators, more insurance companies, and more banks to rival tourism’s contribution to GDP.*

**GATEWAY BFR: ** Client Evolution – What do you see as the differences between the client of 25 years ago and the client of today?

**CC:** *With the advent of instant electronic communications, through smart phones and other devices, the client of today has become more demanding than the client of 25 years ago when business was conducted with less technology. Even when you are away from the office you can get a communiqué from your client on your smart phone and they – knowing that you have the device – expect responses even after hours. There was far less interaction with the client 25 years ago. The client of today is also savvier; they compare the level of service with our competitors more efficiently with technology, and they are more informed as a result. For example, it is far easier today for a client to find out about the advantages and disadvantages of using a jurisdiction such as The Bahamas with a click of the mouse on the internet. Information travels faster today than it did 25 years ago.*

*Of course, on the other side of the coin, we as financial industry professionals demand more of the client – e.g. in terms of compliance and know your customer rules – due to increased regulation.*

**George Clifford Culmer**, FCA is a pioneering Bahamian in the accountancy profession. He qualified as a Chartered Accountant in 1966 and became the first Bahamian member of the Institute of Chartered Accountants in England and Wales. He is now a Fellow (FCA) of that Institute, a member of the Chartered Institute of Taxation in London, and a fellow of the Institute of Directors in London. Mr.Culmer is a founding member of the Bahamas Institute of Chartered Accountants (BICA) which was established in 1971, and served as the second President.

Mr. Culmer is Senior Partner of BDO Bahamas, a firm he founded as Clifford Culmer & Co. in 1977, which is now celebrating 35 years in existence.