Since the Foreign Account Tax Compliance Act (FATCA) appeared on the banks regulatory radar, there have been a number of key compliance milestones. July 1st is the final date looming, signalling the deadline for banks to comply with IRS demands to identify their U.S. account holders.
With so much attention paid to complying with so many different regulations, banks could be forgiven for viewing FATCA as just another compliance box ticking exercise. But actually, it should be seen as an opportunity to learn more about their clients in order to drive new business.
One of the benefits of FATCA is that banks have fresh customer data at their disposal. This information can help them identify their most profitable clients, and target the ones that have the most potential for growth. As different business lines come under pressure to gain an edge over rival banks, any data that delivers new insights about client behaviour is welcome. Greater transparency can be derived from FATCA driven information to help gain this all- important competitive advantage.
As July 1st draws ever closer, we are already seeing the industry look beyond the "let's just comply with FATCA" approach. Indeed, many major financial institutions are witnessing the fruits of their complying with FATCA labour – from finding ways to get to know their customers better, to running day-to-day operations more efficiently. These firms are also able to create new financial products more quickly, and improve their overall investment performance.
So for banks yet to consider potential business benefits that can be derived from new information in a post-FATCA world, now is the time to put it at the forefront of their data management strategy.