GEISHA KOW­LESSAR-ALON­ZO

It’s prob­a­bly not an un­der­state­ment that T&T’s reg­u­la­to­ry en­vi­ron­ment for dig­i­tal pay­ments has tra­di­tion­al­ly been ex­treme­ly con­ser­v­a­tive, bare­ly re­ac­tive, and by and large, un­co­op­er­a­tive with MSMEs and new en­trants/dis­rup­tors - es­pe­cial­ly those in the Fin­Tech and Dig­i­tal Fi­nan­cial Ser­vices (DFS) sec­tor, says ICT and Dig­i­tal Econ­o­my Strate­gist Tra­cy Hack­shaw.

How­ev­er, the re­cent Cen­tral Bank’s Pol­i­cy Pro­pos­al Doc­u­ment (PPD) which has among its ob­jec­tives, an in­tent to “fa­cil­i­tate e-com­merce, cash­less pay­ments and fi­nan­cial in­clu­sion” has been not­ed as a step in the right di­rec­tion.

Cur­rent­ly, the Cen­tral Bank has a broad man­date un­der the Cen­tral Bank Act, Chap. 79:02 (CBA) to“su­per­vise the op­er­a­tions of pay­ment sys­tems in T&T gen­er­al­ly, in­ter­bank pay­ment sys­tems in ac­cor­dance with the Fi­nan­cial In­sti­tu­tions Act and the trans­fer of funds by elec­tron­ic means in­clud­ing mon­ey trans­mis­sion or re­mit­tance busi­ness.

In ad­di­tion, the Cen­tral Bank has is­sued sev­er­al guide­lines to treat with the reg­u­la­tion of non-in­ter­bank pay­ment sys­tems and pay­ment ser­vice providers (PSPs) in line with its re­spon­si­bil­i­ties un­der the CBA, how­ev­er, the bank has ac­knowl­edged that the frame­work for the reg­u­la­tion of these en­ti­ties needs to be strength­ened sig­nif­i­cant­ly.

The bank said the pay­ments sys­tem is be­ing trans­formed by in­no­va­tions in fin­tech and the ex­ist­ing frag­ment­ed and de­fi­cient leg­isla­tive and reg­u­la­to­ry frame­work is in­ad­e­quate to deal with the new pay­ment meth­ods and in­stru­ments that are emerg­ing rapid­ly.

But time­ly im­ple­men­ta­tion is key.

Hack­shaw said the bank’s track record in mov­ing from pro­pos­al to pol­i­cy to leg­is­la­tion and crit­i­cal­ly, to im­ple­men­ta­tion is “not ex­act­ly world-lead­ing,” es­pe­cial­ly when it comes to new sec­tors such as Fin­Tech/DFS.

He cit­ed that the e-Mon­ey Is­suer Or­der of 2020 came a full 12 years af­ter the Fi­nan­cial In­sti­tu­tions Act (FIA) was pro­mul­gat­ed in 2008 where the mat­ter of the re­quire­ment for a Min­is­te­r­i­al Or­der for e-mon­ey is­suers was first leg­is­lat­ed in Sec­tion 17 (4).

“While the Gov­ern­ment of the day was able to pass two key pieces of ICT-re­lat­ed leg­is­la­tion in 2011 - the Elec­tron­ic Trans­ac­tions Act and the Da­ta Pro­tec­tion Act - they now have a rather in­fa­mous rep­u­ta­tion for be­ing on­ly par­tial­ly pro­claimed due pri­mar­i­ly, in both cas­es, to the need for a se­ries of com­pan­ion reg­u­la­tions and ad­di­tion­al in­sti­tu­tion­al ca­pac­i­ty to en­sure the in­tent of the leg­is­la­tion was im­ple­ment­ed,” Hack­shaw said.

He added that it should not be a sur­prise, how­ev­er, that in the 10 years en­su­ing, both the lo­cal and glob­al en­vi­ron­ments have dra­mat­i­cal­ly shift­ed and both of these Acts are now in dire need of re­view and mod­ern­iza­tion.

Over the last few years, and es­pe­cial­ly over the last sev­er­al months, the is­sue of da­ta pro­tec­tion and pri­va­cy has come to the fore with the alarm­ing in­crease in cy­ber­at­tacks, and most re­cent­ly, a very con­cern­ing spike in ran­somware at­tacks with­in ma­jor ac­tors with­in the pub­lic and pri­vate sec­tors.

Cou­pled with this is an in­creased de­mand for per­son­al­ly iden­ti­fi­able in­for­ma­tion (PII) dri­ven by both the pan­dem­ic-re­lat­ed need to share cer­tain med­ical records be­tween stake­hold­ers, sec­tors and ju­ris­dic­tions as well as the glob­al thrust to­wards a dig­i­tal iden­ti­ty par­a­digm.

Hack­shaw said while T&T as­pires to­wards de­vel­oped coun­try sta­tus, it is lag­ging “well be­hind” many of its de­vel­op­ing coun­try com­para­tors in the rapid­ly evolv­ing area of open da­ta and open gov­ern­ment da­ta.

“The very ob­vi­ous ab­sence of a com­pre­hen­sive ap­proach to­wards da­ta gov­er­nance at a na­tion­al lev­el, as well as a fun­da­men­tal lack of ap­pre­ci­a­tion through­out the pub­lic and pri­vate sec­tors of the crit­i­cal­i­ty of da­ta and of the im­por­tance of the de­vel­op­ment of a da­ta-cen­tric cul­ture is a clear by-prod­uct of the im­ma­ture na­ture of the da­ta pro­tec­tion and pri­va­cy reg­u­la­to­ry and leg­isla­tive frame­work in T&T,” Hack­shaw said.

He added the si­mul­ta­ne­ous emer­gence of glob­al­ly im­pact­ful frame­works such as the Gen­er­al Da­ta Pro­tec­tion Reg­u­la­tion (GDPR) in the Eu­ro­pean Union should serve as a wake­up call to this coun­try that it need to get its act to­geth­er, soon­er rather than lat­er.

In this re­newed dri­ve to re­form and mod­ern­ize the reg­u­la­to­ry and leg­isla­tive en­vi­ron­ment to sup­port the lo­cal dig­i­tal econ­o­my, Hack­shaw ad­vised that a key con­sid­er­a­tion which the Gov­ern­ment should take is a de­lib­er­ate step back and al­low the pri­vate sec­tor to in­no­vate and self-reg­u­late while of­fer­ing the ap­pro­pri­ate lev­el of fa­cil­i­ta­tion and in­cen­tiviza­tion as op­posed to walk­ing down the treach­er­ous slope of “over-reg­u­la­tion.”

T&T International Financial Centre CEO John Outridge.

Pay­ment sys­tems must be rel­e­vant

John Out­ridge, CEO of the T&T In­ter­na­tion­al Fi­nan­cial Cen­tre al­so agreed that the leg­is­la­tion by the Cen­tral Bank is wel­comed as it al­lows for the ad­vance­ment of the pay­ments sys­tem to ac­com­mo­date new ser­vice providers, new pay­ment prod­ucts, and new ser­vices to pro­vide for greater in­clu­sion.

The ex­pan­sion of the leg­isla­tive and reg­u­la­to­ry over­sight al­so pro­vides for fur­ther safe­guards with­in the pay­ment ecosys­tem and makes pro­vi­sions to rem­e­dy ex­ist­ing de­fi­cien­cies and out­dat­ed po­lices giv­en re­cent de­vel­op­ments and new en­trants in­to the pay­ment space, he not­ed.

How­ev­er, Out­ridge said, this is not the on­ly means to mod­ernise and sup­port the dig­i­tal en­vi­ron­ment as all pay­ment sys­tems must be rel­e­vant in this dig­i­tal age, ground­ed in law, and pos­sess a strong risk man­age­ment frame­work.

Thus, a lay­ered ap­proach which in­cludes oth­er mea­sures such as the re­view of key el­e­ments to sup­port this di­rec­tion is es­sen­tial to the sup­port of a dig­i­tal econ­o­my.

Ac­cord­ing to Out­rigde these com­po­nents in­clud­ed the thrust to cre­ate a sin­gle ei­den­ti­ty to en­able ac­cess to ser­vices dig­i­tal­ly, re­view of Con­sumer Pro­tec­tion Bill and Cy­ber Se­cu­ri­ty Leg­is­la­tion and re­view of the le­gal frame­work for elec­tron­ic sig­na­tures and ser­vice providers all of which are ac­tive­ly be­ing pur­sued by the Gov­ern­ment.

But giv­en Gov­ern­ment’s pre­vi­ous track record in this area can it now in­spire that need­ed con­fi­dence?

Ac­cord­ing to Out­ridge con­fi­dence is built along­side a frame­work for ed­u­ca­tion.

Ed­u­ca­tion is core to build­ing con­fi­dence, trust, and adop­tion. The pro­vi­sion of bet­ter ac­cess to and man­age­ment of in­for­ma­tion plays a role in the on­go­ing digi­ti­sa­tion and dig­i­tal trans­for­ma­tion of gov­ern­ment and the pub­lic sec­tor.

This, he said, is a core area of the T&TIFC as it strad­dles both the pri­vate and pub­lic sec­tors and aims to bring in­for­ma­tion clos­er to cit­i­zens, by im­prov­ing the fi­nan­cial sys­tems and ser­vice de­liv­ery to end users. The T&T IFC, he added, al­so has as part of its man­date, a re­spon­si­bil­i­ty to ex­e­cute tar­get­ed and in­te­grat­ed pub­lic ed­u­ca­tion cam­paigns to in­crease aware­ness, knowl­edge, un­der­stand­ing and adop­tion of fu­ture-ready fi­nan­cial ser­vices.

Fur­ther, Out­ridge said greater Fin­Tech in­te­gra­tion has the po­ten­tial to dri­ve fi­nan­cial ser­vice in­ter­me­di­a­tion by re­duc­ing cost and broad­en­ing the ac­cess to fi­nance, wealth man­age­ment ser­vices, in­creas­ing fi­nan­cial in­clu­sion, and im­prov­ing ef­fi­cien­cy by re­duc­ing in­for­ma­tion asym­me­tries and in­creas­ing the ease and speed of do­ing busi­ness­es.