The financial services industry in Trinidad and Tobago is one of the most developed in the Caribbean; however, the country still falls behind other emerging markets in its approach to online banking and digital payments. In 2020 customers continue to contact their banks by telephone to perform routine services, such as balance inquiries. As such, there is vast scope for digital reform and an opportunity for financial technology (fintech) companies to level the playing field by encouraging the development of digital financial services.
New Deals
In digital terms, T&T is far from being a completely undeveloped market, and a number of developments are already under way. On October 8, 2019 Republic Bank signed an agreement to acquire a 19.99% equity stake in electronic payment solutions company Caribbean FinTech Nobis BaaS, a subsidiary of local e-payment group WiPay Holdings. As of early 2020, the deal had yet to be finalised and was still subject to regulatory approval. The move bolsters Republic Bank’s strategy to encourage digital transformation while boosting its fintech portfolio. In 2019 the IDB Invest group, a member of the Inter-American Development Bank, also committed to support Republic Bank in its broader digitalisation programme.
“Trinidadian banks are keen to enhance the options available to clients and do not see fintech as competition but an enhancement,” Nigel Baptiste, CEO of Republic Financial Holdings, which owns all banks in the Republic Bank Group, told OBG. This is not only because it reduces the cost of transactions, but also because it brings real security advantages.”
In October 2019 Republic Bank and WiPay deployed a contactless, wearable e-payment solution at the Hero Caribbean Premier League cricket match. In doing so they becoming the first financial institutions to employ such technology at a major Caribbean sporting event. The implication is that similar wearable technology could be used during T&T’s annual Carnival celebration. Meanwhile, JMMB Group is partnering with PaySett Corporation, a global provider of e-payment solutions. to expand adoption of such services in T&T. Several of the top global banks process payments through PaySett software, according to the company.
Out with the Old
Efforts could soon be under way to phase out paper cheques and promote cashless payment systems. T&T would not be the first Caribbean nation to discontinue paper banking. RBC Royal Bank in Aruba began to discontinue cashing cheques in 2018 and was successful in halting the use of all cheques by 2019. An undervalued upshot of both going cashless – and encouraging the uptake of fintech – is the positive effect on crime. A 2014 study in the US state of Missouri found that burglary and assault dropped by 9.8% after the government shifted payments for social welfare benefits from cash to electronic transfers by reducing the amount of currency available to be used for illegal purposes. The key to unlocking digital benefits is also in undermining cash culture, which remains entrenched in a market like T&T (see overview).
Fintech
In September 2019 T&T hosted the FinTech Stakeholder Engagement Session at the T&T International Financial Centre (TTIFC) to highlight the country’s use of fintech as a means of diversifying the economy and ensuring future prosperity. Shortly afterwards, the TTIFC announced the formation of the FinTech Association of T&T, a volunteer organisation with membership open to promising fintech start-ups, individuals involved in fintech activities, financial services providers and tech companies. The FinTech Association’s goal is to work closely with government and regulators to advocate for the adoption of global standards and best practices in the domestic fintech segment.
In 2019 Tech Beach Retreat, a T&T-owned company headed by brothers Nicolas and Kyle Maloney, hosted Jack Dorsey of Twitter for the fourth Tech Beach convention in Bermuda. Stakeholders discussed T&T’s status a financial leader in the Caribbean, although issues with the country’s slow implementation of tech infrastructure and the limited digital financial literacy of the public were identified as major obstacles to future development. Since November 2018 the Central Bank of T&T has welcomed technological developments and financial inclusion efforts because of their ability to reduce transaction costs while leading to a stronger financial system. The central bank is expected to release a statement on fintech in early 2020.
A number of global firms are investing in blockchain solutions, and there are now three cryptocurrency exchanges that work with T&T credit cards. In nearby Barbados, fintech firm Bitt utilises blockchain and distributed ledger technology to make secure peer-topeer payments for individuals, merchants and banks.
Changing Gears
Major government bodies are also getting involved. In December 2019 the T&T Securities and Exchange Commission (TTSEC) announced it was actively planning to introduce electronic trading to the domestic stock market and was working on by-laws for the mutual fund industry. The T&T Stock Exchange is following suit, replacing traditional methods with instant, user-friendly technology to stimulate faster trading and increase the volume of deals.
“The stock exchange can only do well when there is support from the government, the private sector, investors and brokers,” Amoy Van Lowe, CEO of the TTSEC, told OBG. “Operating as an island in 2020 is impossible; stakeholder engagement will work to improve partnerships collaboration,” she added.
Progress will be slow without engagement from all actors across the economy, including banks, government, fintech companies and regulators. There is ample incentive for local actors to focus on the region and ensure that fintech adoption across the islands supports broader economic development. A CARICOM-wide payments licence that provides access to a larger market would be a solid development initiative.
Digital Banking Race
With the aim of becoming T&T’s number-one digital bank, Scotiabank has invested more than TT$16.5bn ($2.4bn) per year in technology across its banking network, representing more than 10% of the company’s revenue. While such investments come at a significant cost, according to Stephen Bagnarol, the bank’s managing director, the outlay is not only necessary but is integral to running a bank. “Technology and banking are strongly correlated. For technology companies in the financial services industry, driving digital transformation to deliver a compelling experience for customers is key,” Bagnarol told OBG. “The introduction of digital tools including revamped branch spaces with next generation ATMs, alert notifications and enhanced processes that help customers bank more conveniently and comfortably are just some of the ways banking continues to evolve digitally to allow for better informed customer interactions.” In line with these goals, in April 2019 Scotiabank unveiled a series of digital services aimed at improving security and facilitating financial access for customers.
In August 2019 RBC Royal Bank launched a new digitally enabled branch in Maraval, located to the north of Port of Spain. The branch has tablets that allow customers to access their accounts and conduct transactions without the need for bank personnel. Similarly, First Citizens Group became one of the first banks in the region to implement Visa Loyalty Solutions, a payment platform and loyalty scheme co-created by fintech and insurtech company Novae and credit card giant Visa.
Looking Ahead
Local banks have mirrored regional and global trends, adapting to technological change in the financial industry and expanding from their traditional base of services. It is likely that mobile apps, online banking tools and full-service ATMs will soon become the industry standard in T&T. “Digital disruption is taking hold and within the next two to five years, the banking sector will dramatically change,” Mitchell de Silva, COO of Citibank T&T, told OBG. “People adhering to traditional methods of making payments may soon encounter difficulty, as a majority of consumers will shift to instant and digital options,” he added.
Further commenting on digital disruptions in the banking sector, Ronald Carter, CEO of JMMB Bank, told OBG that offering both digital and physical options would be the most beneficial option. “The hybrid model of advanced digital offerings and welcoming spaces will pave the way for banking in the future,” he said.
While digital penetration in T&T has not yet come close to that of developed economies, leveraging technology to offer higher levels of flexibility, provide convenience to customers and reduce costs is critical for T&T bank. Online services enjoy lower operating costs than brick-and-mortar institutions, while getting ahead of the technology curve with fintech services would put the nation in a strong position to assert itself as an influential financial centre in the Caribbean.
To help fund such initiatives, it would greatly benefit T&T to further develop the local stock exchange to better compete with regional counterparts, such as the Jamaican Stock Exchange (JSE). WiPay, for example, has plans to list as a digital asset on the JSE’s Junior Market for small and medium-sized firms sometime in 2020.
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