Caribbean banks in the fintech age: “Make or Break”

These are indeed make or break times for fintech financial technology in the Caribbean. The world isĀ 
marching steadily to a digital platform for every financial or commercial transaction or exchange from the
mundane account enquiries, bill payments, transfers to the sexier trading, asset management, lending
and digital ledger applications.

While most Caribbean banks have a digital interface and are actively pushing clients to go online for bank
services, most are still light years behind where they ought to be in harnessing fintech to optimize
operations. They lag behind payment services providers such as PayPal, Venmo, WeChat given the
overarching limitation of allowing only bank to bank transfers and the still too high cost of wire transfers.
Point of sale transactions still require physical card readers and not the touch free digital readers common
in major city centres. Loan application and approval still requires a visit to the lending officer and hard
copies of supporting documentation and a much longer wait time than on GoFundMe or Kickstarter.

Banks have also ceded ground to blockchain technologies which have been deployed to solve issues
endemic to developing states. In Haiti for instance blockchain technologies are being used to transform
the food chain landscape. Agriledger allows international buyers to scan a QR code and immediately
access data on produce origin, transport, and costs in each step in the supply chain. This process makes
it possible to certify product quality, thereby removing a key concern of potential buyers of Haitian
agricultural goods. Everyone knows nothing guarantees commercial success and longevity quite like
providing a solution to a major problem.

Banks and other traditional financial institutions have also been slow to use the available data
technologies to create the data architecture to combat fraud and money laundering. Financial institutions
have been unable or unwilling to capitalize on their regional reach and presence to create cross country
customer profiles which might be used to detect fraudulent or suspicious transactions. Instead they
operate in silos and a customer of the bank in say Jamaica is a unknown entity to the same bank in
Trinidad. While it is true that such moves might require legislative or regulatory changes to effect, banks
have not been exactly chomping at the bit or agitating for reform. Meanwhile in the other parts of the
world regulatory technology is growing in prominence as financial institutions turn to technology to tackle
financial crime.

Bill Gates is credited with stating that banking is necessary but banks are not. We are not quite there yet
as most financial technology players still require or employ a bank interface . Until and unless there is
widescale usage and acceptance of cryptocurrencies or decentralized currencies, banks will retain
relevance if only as assistants to fintech companies. They will however have to do more to retain central
positioning in the financial ecosystem.