Earlier this year, Trinidad and Tobago was looking relatively resistant to the worst effects of the coronavirus pandemic. However, given that oil and tourism are two of the main contributors to GDP – with a 45% and 7.6% share, respectively, in 2018 – T&T is beginning to feel the economic pinch. In response, policymakers have deployed a variety of fiscal and monetary policy tools, supported by the country’s banks.
Banks have implemented reductions in interest rates and extended loan repayment deferrals, as well as supporting small and medium-sized enterprises (SMEs).
“The banking sector will be central to the economy’s recovery,” Reshard Mohammed, chief financial and administrative officer at Scotiabank T&T, told OBG. “Fortunately, it is well capitalised and has therefore been able to carry out a number of customer assistance programmes to support those who are struggling with the current economic climate.”
Concerns had already been raised prior to the pandemic regarding the instability of oil prices and the longevity of T&T’s reserves. Covid-19 underlined the need to rethink how T&T does business – and added the impetus to do so.
Accelerating development within the country’s financial technology (fintech) space, in particular, has emerged as a growing priority.
Expanding fintech
Prior to the pandemic, T&T was a relatively underdeveloped market in terms of fintech and mobile payments, with most legacy banks preferring to use established interfaces.
However, with the country already established as a financial services hub, there is significant potential for growth in this area. “There are some fintech companies that are already providing solutions in Trinidad & Tobago and supporting the delivery of financial services. However, these will only flourish if there is a conducive regulatory framework in place,” Ronald Carter, chief country officer and CEO of JMMB Bank T&T, told OBG.
Further to this, the virus has accelerated fintech uptake among clients.
“The onset of Covid-19 has caused an irreversible acceleration in the use of digital banking services by customers. Banks are actively engaged in assisting customers stay protected and migrate to online channels,” Mohammed told OBG. “This increase in digital adoption has been accompanied by robust cybersecurity measures to ensure that customers can use these channels with confidence,” he added.
Regional early adopter
Recent shifts build on steps taken before the pandemic towards establishing a vibrant fintech ecosystem.
In 2018 the Trinidad and Tobago International Financial Centre (T&T IFC) developed a ‘FinTech Roadmap’, based on a comprehensive audit of world leaders in the sector.
T&T IFC was initially established to attract investment in the financial services sector. Expanding their remit to advocate for fintech was therefore a natural step, in light of the segment’s growing global importance.
Following on from this, in February this year T&T IFC launched the FinTech Association of Trinidad and Tobago (FinTech TT).
Bringing together stakeholders in financial services, technology and related sectors, FinTech TT’s mission is to work with authorities and regulators to improve the country’s fintech ecosystem.
As Omar Sultan-Khan, the CEO of T&T IFC, told local media at the time, “we have seen financial centres employ innovation and technology to power growth and increase competitiveness. As the region’s premier financial hub, T&T is well positioned to do the same.”
In parallel to this, a range of opportunities are emerging from the growing phenomenon of nearshoring, and a well-developed fintech sector will help T&T to capitalise on these.
While the political will clearly exists to drive growth in fintech, there remains a shortfall in start-up capital available to the type of disruptive start-ups that are best positioned to thrive during the fintech revolution.
The World Economic Forum’s 2019 Global Competitiveness Index placed T&T a creditable 45th out of 141 countries in terms of its overall financial sector, but improvements are clearly needed in terms of funding for SMEs (110th position) and nurturing an entrepreneurial culture (119th position).
There therefore remains considerable scope for the expansion of T&T’s fintech segment in the short to medium term. The country seems well positioned to realise this potential, with some progress already achieved during the Covid-19 period, as T&T aims to become a fintech leader within the region.
Read More from OBG
