How Banks Can Leverage Subsidiary and Parent Company Relationships to Provide Better Services and Forex to Customers in Trinidad and Tobago

In the increasingly interconnected financial world, banks are constantly seeking ways to offer enhanced services and increased access to foreign exchange (forex) for their customers. One powerful, often underutilized tool at their disposal is the strategic use of their relationships with subsidiaries and parent companies. By tapping into the resources, expertise, and networks of these related entities, banks can significantly improve customer satisfaction and increase the availability of forex.

In Trinidad and Tobago, most of the 8 commercial banks are part of larger regional or international banking groups, meaning they often have subsidiary relationships or are part of multinational parent companies. Here's a breakdown:

1. Scotiabank Trinidad and Tobago – A subsidiary of Canada's Scotiabank, part of a major global network.
2. Citibank Trinidad and Tobago – A local subsidiary of the global Citigroup based in the U.S.
3. RBC Royal Bank – A subsidiary of the Royal Bank of Canada, one of the largest banks in the world.
4. CIBC FirstCaribbean International Bank – A subsidiary of the Canadian Imperial Bank of Commerce (CIBC), with operations throughout the Caribbean.
5. JMMB Bank – Part of the Jamaica Money Market Brokers Group, which has operations in Jamaica, the Dominican Republic, and Trinidad and Tobago.
6. Republic Bank – Part of the Republic Financial Holdings group, with subsidiaries and branches across the Caribbean and Ghana.
7. First Citizens Bank – Based in Trinidad and Tobago but has expanded to Barbados and other Caribbean markets.
8. ANSA Merchant Bank – Primarily local, but the ANSA McAL group operates regionally.

Of the 8 banks, all but ANSA Merchant Bank have clear subsidiary or parent relationships with international banking institutions or groups.

Here’s how banks can  leverage their subsidiary relationships to provide  better,cost effective and innovative services to consumers:

1. Access to Global Networks and Expertise

Parent companies and subsidiaries often operate across different geographies, which opens access to a broader network of financial markets, currencies, and foreign exchange markets. For instance, a bank with subsidiaries in multiple countries or a parent company with a global footprint can tap into forex markets at more competitive rates. This gives customers access to more favorable exchange rates, reduces transaction costs, and improves the speed of forex-related services.

Example: A bank operating in the U.S. with a parent company in Europe could use this relationship to facilitate seamless euro-dollar transactions, offering lower fees and better exchange rates due to access to internal liquidity channels.

2. Liquidity Sharing for Increased Forex Availability

Banks often face challenges in maintaining adequate forex reserves to meet customer demand. However, when they belong to a larger banking group with subsidiaries or a parent company, liquidity pooling becomes possible. Through agreements, they can share liquidity reserves, increasing the availability of forex without requiring significant individual capital allocations.

This liquidity-sharing arrangement can be especially beneficial during times of high demand or economic instability, ensuring that customers can access the forex they need without delays or excessive costs.

3. Cross-Border Financial Solutions

Banks can leverage their subsidiary and parent company relationships to offer cross-border financial solutions that appeal to international clients, expatriates, and businesses engaged in global trade. These relationships allow banks to streamline cross-border payments, offer integrated accounts that support multiple currencies, and provide real-time forex services. Customers benefit from faster transaction times, lower fees, and seamless transfers across borders.

Example: A Trinidadian bank with a Canada-based parent company could offer its customers direct access to Canadian dollars, facilitating trade with Canada while offering attractive conversion rates and fast processing through their international network. This setup would streamline currency exchange for Trinidadian businesses and individuals dealing with Canada, ensuring more efficient and cost-effective transactions

4. Integrated Forex Platforms and Technological Synergies

Subsidiaries or parent companies may have access to advanced forex trading platforms or technology that can be integrated into local operations. Banks can use this technological advantage to offer innovative forex services, such as mobile forex trading apps, live exchange rate alerts, or automated forex hedging services for businesses. This can improve customer experience by providing them with more control, real-time data, and tools to manage their foreign exchange needs more efficiently.

By leveraging shared technological infrastructure, banks can also reduce operational costs, which can lead to lower fees for customers.

5. Risk Management and Hedging Services

When a bank is part of a larger group with subsidiaries or a parent company in diverse markets, it can more effectively manage forex risk through hedging strategies. These relationships allow banks to offer better risk management solutions to customers, including forex forward contracts, options, and swaps. Customers, particularly businesses that operate globally, benefit from predictable costs and reduced exposure to currency fluctuations.

6. Better Credit Ratings and Access to Capital

A strong parent company or financially sound subsidiaries can bolster a bank's credit rating, allowing it to secure better loan terms and raise more capital. This can be passed on to customers in the form of more favorable loan terms, credit facilities, and better forex trading conditions. Moreover, with a solid capital base, banks can afford to hold larger forex reserves, ensuring that their customers always have access to the foreign currency they need.

7. Expanded Product Offerings

Leveraging a relationship with a subsidiary or parent company allows banks to expand their product offerings. For instance, banks can collaborate with foreign subsidiaries to offer investment products in different currencies, open foreign-denominated accounts, or even issue multi-currency credit cards. This expanded product portfolio caters to the growing demand for diversified financial products in an increasingly global economy.

Example: A bank in the Middle East, through its relationship with a European parent company, could offer its customers forex-denominated investment accounts that pay out interest in euros, attracting clients looking to diversify their holdings outside the local currency.

Conclusion

By effectively using their relationships with subsidiaries or parent companies, banks can unlock a wealth of opportunities to provide better services and greater forex access to their customers. These relationships not only increase liquidity and reduce costs but also offer access to global networks, innovative financial products, and advanced technology. As the global economy continues to evolve, banks that embrace these synergies will be well-positioned to meet the needs of their customers in an increasingly interconnected world.