Banking
How Many Are Going For Digital Cash
Banking no longer on the edge of the world
By "Is there an ATM machine I can go to?" No! Banking staff in the tourism-mad Cook Islands got so used to answering that question in recent years that they could load enough information and sympathy into that simple one-syllable answer to make even the most astounded tourist ask no more. No longer. Two years ago, ANZ Avarua installed two ATM machines, one right outside its front door and the other at the airport, and they have plans for a third.
Tourists still gawp like they've reached the vertical edge of the planet when the machines occasionally spot an "Out of Order" sign. But locals have taken to electronic banking like pigs to coconuts, enthusiastically chomping on the chance to avoid standing in line for some cash.
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EFTPOS too is another ANZ introduction to the Cooks, with 100 merchants around the capital island Rarotonga snorting happily at much easier credit card transactions.
They are part of a region-wide network of EFTPOS and ATM machines chewing through 650,000 transactions a month.
"Similarly, over the next few months we will launch additional electronic functionality including the ability to pay telephone and electricity bills or purchase telephone cards and mobile phone top ups via ATMs," says ANZ Avarua manager, Paul Murphy.
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ANZ is undisputed top dog in Pacific banking, but not in the Cook Islands. Westpac has been here longer. Westpac has plans to introduce electronic banking as well. But for the moment it is satisfied holding most of the islands' major commercial accounts, about 67% of its customer list. ³We always get a thrill out of putting a local into business, or a house, or a vehicle if they've been travelling around in the wet," says Westpac's Cook Islands manager, Terry Smith, a tall, amiable ginger-haired Australian.
Style differences between the two banks couldn't be stronger. Where ANZ sticks mostly to its bland corporate décor even in exotic south-sea islands, Westpac is generously decorated with local art and craft work. Staff number 50, large for the Cooks, and have a different pareu or island print uniform for each day of the week. "Ninety nine percent of our staff are Cook Islanders and they appreciate it. We try and blend in with the area that we operate in."
Westpac is also unique in opening Saturday mornings to fit in with weekend shopping habits.
What the banks do share is a still "very liquid" level of deposits. Surprisingly, Cook Islanders reversed a brief moment of capital flight during the mid-nineties economic collapse and savings have stayed strong since. Even the aftermath of September 11 failed to make much of a dent. ANZ cites confidentiality codes and won¹t comment on "customers behaviours". But Smith has only noticed a "slowing" in deposit rates.
Says Murphy: "One of the reasons the Cook Islands has experienced a period of solid economic growth is the healthy liquidity in the banking sector over the past two to three years. This has provided a sound funding base for investments that have been made in the various tourism or business expansion projects, and the increased number of Cook Islanders that have been able to acquire their own houses."
Interest rates remain high, especially for a country where the worst political instability rattles nothing more than a few tea cups in the parliamentary dining room. Bullet holes in walls: zero. Dead bodies in the streets: zero. Armed coups: zero. Residents pack-raped: zero. Economic indicators in free fall: zero. And yet, Cook Islanders still pay some of the highest interest rates in the world. ANZ announced a reduction in its base lend rate to 8.95%. "Existing risk margins remain unchanged," states the bank, referring to the country-risk margin banks built into each island. There are strange similarities, however, between island rates.
ANZ branches in war-scarred East Timor, for example, charge business customers 11%, according to its website. Despite nearly half a decade of "solid economic growth" in the Cooks, however, ANZ loan interest rates are only a quarter of a percent lower, at 10.75%. ANZ did not respond to a question about how the extra income from higher interest rates are actually used to compensate for country risk, or whether they just mean bigger profits.
Westpac's Smith says fees are pretty much the same as in Australia. Higher interest rates reflect the vulnerability of island nations to disasters like cyclones, he says. Putting up thick wooden shutters is an annual hurricane season training ritual for staff. Westpac and ANZ generally match rates, while the state-owned BCI, Bank of the Cook Islands, is always a percent or two higher, servicing more marginal clients, including many of the country's black pearl farmers.
