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Barriers to offshore banking
The middle class avoids current offshore banking because it
is user-hostile and puts their life savings at high risk.
An offshore bank often takes a week or more to service requests for
statements sent by snail-mail. Offshore banks are notorious for
obsconding with customers' money. Reputation information on these
banks is hard to find to nonexistant. The typical offshore bank
customer spends $1,000's on legal fees to obtain information on reputable
banks, the legality of what they are doing in both the local and
offshore jurisdictions, and to set up obscure, sophisticated legal
entities. There aren't any good statistics, but I'd guess that most
of the money saved by going offshore is lost to legal fees and fraud.
A good on-line bank will tackle user friendliness by providing rapid,
detailed feedback, either instant (IP connection) or slightly
delayed (e-mail). This also indirectly tackles trust. You sleep
better when you can instantly obtain the status of your
account, withdraw your funds in case of emergency, distribute
funds across several different banks with low overhead, and
easily get detailed information about the variety of banks
and accounts available.
Trust could be more directly tackled by the following:
* Private deposit insurance, with risk spread across several
offshore banks
* Offshore bank rating service, also available online
* Sponsorship by major banks, with a longer-term reputation
and larger capital base
Nick Szabo [email protected]