What is need­ed for T&T to tru­ly cre­ate an en­abling fin­tech en­vi­ron­ment?

Ac­cord­ing to Richard Young, chair­man of the T&T In­ter­na­tion­al Fi­nan­cial Cen­tre (TTIFC) in a world where phys­i­cal cash con­tin­ues to be re­placed by dig­i­tal mon­ey, this coun­try’s de­vel­op­ment of a ro­bust and ag­ile dig­i­tal econ­o­my will be fun­da­men­tal to its fu­ture eco­nom­ic pros­per­i­ty.

Speak­ing at the open­ing of the Com­mon­wealth Fin­tech Toolk­it Work­shop held at the Radis­son Ho­tel, Port-of-Spain Young ex­plained that T&T’s jour­ney to true “cash­less so­ci­ety” sta­tus is one that re­quires the pub­lic sec­tor to be po­si­tioned as a State-backed util­i­ty that aligns its op­er­a­tions as a pay­ment provider to na­tion­al con­sumers.

“As such, it is para­mount that we de­liv­er a pay­ments sys­tem that is fit for pur­pose,” Young ad­vised.

Not­ing that T&T has long en­joyed the sta­tus of be­ing the lead­ing fi­nan­cial hub in the re­gion Young how­ev­er, said in this age of dis­rup­tion and change, in­dus­tri­al go­liaths have been tak­en down by tech­no­log­i­cal start-ups, adding that noth­ing can be tak­en for grant­ed.

“T&T’s fi­nan­cial sys­tem is very much in­ter­linked with oth­er do­mains in our econ­o­my and so­ci­ety. Shifts in the bank­ing sec­tor and con­sumer be­hav­iour have trig­gered many changes in the way that pay­ments are made and the de­mands that con­sumers are mak­ing on busi­ness­es.

“The rate to which we can adapt to these changes has been a key met­ric for the de­vel­op­ment of the sec­tor at large,” Young added.

He al­so not­ed that dri­ven by the rapid adop­tion of mo­bile com­mu­ni­ca­tions, the ubiq­ui­ty of e-com­merce and so­cial me­dia, and the rise in glob­al ter­ror­ism and crime, the mi­gra­tion to a cash­less so­ci­ety is a process that con­tin­ues to be em­braced at vary­ing lev­els of de­vel­op­ment around the world.

For ex­am­ple, Young cit­ed that coun­tries such as Swe­den, Aus­tralia, Chi­na, and the Unit­ed King­dom, are among many that are pre­dict­ed to make the tran­si­tion to cash­less sta­tus by 2023, with Swe­den lead­ing the course by sig­nif­i­cant­ly re­duc­ing its GDP con­tri­bu­tions from cash trans­ac­tions to one per cent.

“Gov­ern­ments must play a ma­jor role as a cat­a­lyst for in­no­va­tion as it re­lates to fin­tech ca­pa­bil­i­ties,” Young re­it­er­at­ed.

Ad­di­tion­al­ly, he said through the de­vel­op­ment of in­no­v­a­tive use cas­es with­in the pub­lic sec­tor, the fi­nan­cial sec­tor would be able to iden­ti­fy and en­able lead­ing dig­i­tal fi­nan­cial ser­vice ca­pa­bil­i­ties which will al­low T&T’s lo­cal fi­nan­cial sec­tor to ex­cel re­gion­al stan­dards.

This, Young said, will es­tab­lish this coun­try as an at­trac­tive mar­ket for fi­nan­cial ser­vice providers to use T&T as a test­ing ground for new dig­i­tal fi­nan­cial ser­vices ca­pa­bil­i­ties, as it aims to build cut­ting-edge pay­ment ser­vices and be­come a show­case for the wider Caribbean through the ex­am­ples of the pub­lic sec­tor.

John Out­ridge, CEO of the T&T In­ter­na­tion­al Fi­nan­cial Cen­tre, told the Busi­ness Guardian that there al­so need to be more co­he­sive ef­forts re­gard­ing fin­tech achieve­ment in T&T.

“We have dif­fer­ent pock­ets all try­ing to move fin­tech in the coun­try but co­or­di­na­tion is need­ed. You have the reg­u­la­tors, the Gov­ern­ment and there’s al­so the fin­tech sec­tor which al­so wants to make strides,” Out­ridge ex­plained.

Glob­al­ly, he said fin­tech is a large eco­nom­ic dri­ver and in some Cari­com coun­tries it is pro­ject­ed to add ten to 12 per cent to the GDP be­cause it sits be­tween the fi­nan­cial and tech­no­log­i­cal realm.

“So we see fin­tech pro­vid­ing even more op­por­tu­ni­ties for peo­ple with­in the tech­nol­o­gy field; pro­vid­ing big­ger ca­pa­bil­i­ties for the in­sur­ance and bank­ing sec­tors where they could now build new prod­ucts and in­no­v­a­tive so­lu­tions and where they can roll-up in­to in­to the re­gion­al and in­ter­na­tion­al ar­eas,” Out­ridge added.

Pro­vid­ing some de­tails about the Fin­tech Toolk­it, Out­ridge said it is an ex­cep­tion­al doc­u­ment which pro­vides a very prag­mat­ic ap­proach for coun­tries such as T&T, now set­ting out on its own ex­e­cu­tion plans for fin­tech.

The aims of the toolk­it in­clude to pro­vide tech­ni­cal guid­ance on fin­tech and fin­tech ap­pli­ca­tions in­clud­ing us­ing fin­tech to achieve de­vel­op­ment out­comes; to set out a frame­work for cre­at­ing en­abling en­vi­ron­ments for fin­tech in­clud­ing with ap­pro­pri­ate leg­is­la­tion, reg­u­la­tion, in­sti­tu­tions and poli­cies; and to build fin­tech ca­pac­i­ty among Gov­ern­ment staff.

In its strate­gic plan for 2021 to 2026 the Cen­tral Bank not­ed that its evolv­ing ap­proach to fin­tech so­lu­tions is ex­pect­ed to tran­si­tion to su­per­vi­sion of li­censed en­ti­ties, some of whom may op­er­ate in a “sand­box” set­ting—that is, some fin­tech com­pa­nies may get lim­it­ed scope li­cens­es in­volv­ing very close mon­i­tor­ing of their ac­tiv­i­ties over six to 12 month pe­ri­ods.

Out­ridge added that since repo­si­tion­ing of its man­date in April 2021, the TTIFC has been work­ing with the Trea­sury Di­vi­sion to de­vel­op Elec­tron­ic Funds Trans­fer (EFT) meth­ods, strate­gies and in­struc­tions for the pub­lic sec­tor to en­cour­age and fa­cil­i­tate the dig­i­tal­i­sa­tion of gov­ern­ment pay­ments by min­istries, de­part­ments and agen­cies.

He added this will be the or­gan­i­sa­tion’s key area of fo­cus as it aims to com­plete the ex­e­cu­tion of Phase One of this roadmap by De­cem­ber 2022.

Ad­di­tion­al­ly, he said the TTIFC has suc­cess­ful­ly draft­ed EFT in­struc­tions to lever­age the plat­forms of pay­ment ser­vice providers (PSPs) to pro­vide for the un­der­banked and un­banked to do busi­ness with the Gov­ern­ment via a com­bined net­work of over 1,500 agents across the coun­try.

“This will not on­ly al­low for greater reach to cit­i­zens and of­fer a con­ve­nient ap­proach for cash us­age while dig­i­tal­is­ing rev­enue col­lec­tion, but can al­so spur the growth and sus­tain­abil­i­ty of new fin­tech and pay­ment al­ter­na­tives that are com­par­a­tive­ly more se­cure, ef­fi­cient, con­ve­nient, cost-ef­fec­tive, ac­ces­si­ble, and aligned to the needs of the mod­ern-day con­sumer,” Out­ridge added.

Al­so, he iden­ti­fied that the use of LVPs or low-val­ue pay­ments will pro­vide cit­i­zens liv­ing in rur­al ar­eas, with more ac­cess to gov­ern­ment ser­vices, while al­so ben­e­fit­ing from the se­cu­ri­ty en­hance­ments that dig­i­tal pay­ment ser­vices of­fer.

“In ad­di­tion to re­duc­ing cash us­age, dig­i­tal pay­ments can al­so im­prove the ef­fi­cien­cy of rec­on­cil­i­a­tions of gov­ern­ment trans­ac­tions, which can be done in re­al-time, and with re­duced doc­u­men­ta­tion re­quire­ments, the al­ter­na­tive of which is a sig­nif­i­cant hin­drance to the con­sump­tion of Gov­ern­ment and oth­er es­sen­tial fi­nan­cial ser­vices,” Out­ridge fur­ther ex­plained.

Mean­while eco­nom­ic ad­vis­er of the Com­mon­wealth Sec­re­tari­at Akeem Ra­haman said T&T should not rush to es­tab­lish a Cen­tral Bank dig­i­tal cur­ren­cy be­cause oth­er coun­tries in the Caribbean have opt­ed to cre­ate their own CB­DC’s.

He ex­plained that the use of the cur­ren­cy in the Caribbean dif­fered from its im­ple­men­ta­tion in African states, for ex­am­ple.

“For us to de­vel­op a CB­DC we first need to de­cide what prob­lem would we like to solve and then move for­ward to solve that prob­lem.

“So as we see the Caribbean re­gion com­pared to Africa, try­ing to solve dif­fer­ent prob­lems and we should not be aim­ing to de­vel­op a CB­DC just be­cause our Caribbean coun­ter­parts have one and we want one too,” Ra­haman fur­ther ex­plained.

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