The future of finance in the Bahamas – Eye Witness News


By Margaret Butler

With the rise in smartphone adoption in the Caribbean, many industries have sought innovative ways to engage consumers by digitizing their services.

The banking industry is no different as companies seek to establish future financial trends. As the launch of the Sand Dollar, the world’s first central bank digital currency, proved, the Bahamian financial sector is now looking to transform its existing infrastructure by going digital to improve security, reduce costs and expand customer base.

Initially deployed on Exuma and Abaco, in March 2021, nine digital wallet providers circulated $ 130,000 worth of Bahamian digital currency throughout the archipelago.

Several trends are pushing Caribbean banks to accelerate their digitization initiatives.

First, mobile phone and broadband prices have improved significantly. Excluding Haiti, the share of individuals using the Internet in the Caribbean increased from 27% to 53% between 2008 and 2016, while the average cellular mobile penetration rate is above 110%, dramatically increasing the need for reliable digital banking services. and secure.

For example, MonCash, a mobile phone-based digital wallet, is used by rural households and farmers to improve access to financial services in Haiti. It is estimated that 14% of Haitians now have these accounts while 38% of adults receive or send domestic funds via their mobile phones.

Likewise, the COVID-19 pandemic has reduced the retail banking activities of customers. This catalyzed a shift in customer base from traditional banks to fintech startups. The Bahamas’ relatively high banking rate of 80% further accelerates current trends.

A survey of 105 banking executives from Latin America and the Caribbean found that data security is their main motivation for digitization. This has been a persistent concern for financial institutions, as the region is particularly vulnerable to cybercrime.

According to an Organization of American States (OAS) report, at least nine in ten banking entities suffered cyber incidents in 2018, while 37% of banks in the region were victims of successful attacks.

The total annual cost of banking entity digital security incident response and recovery was approximately $ 809 million in 2017.

Digitization allows businesses to base their infrastructure in the cloud through platforms such as Amazon Web Services (AWS), Google Cloud Platform (GCP), and Microsoft Azure, ensuring constant security updates. In contrast, the lack of agility of legacy legacy internal systems can make them more vulnerable to hacks and other cyber attacks.

Digital banks are leveraging technology to lower operating costs. Large traditional banking institutions have an average cost-to-income ratio (CIR) of between 45% and 55%, while major digital banks have a CIR of 32-40%. While the initial costs of digitizing and migrating to the cloud can be high, they can drop by up to 70% and deliver a 15% return on investment (ROI) in the first few years. In addition, traditional banks spend an average of $ 150 to acquire each new customer.

Margaret A. Butler has headed Citibank’s Bahamas franchise as Citi Country Officer since June 2005, with responsibility for managing Citi’s interests in the country. She is responsible for domestic corporate banking activities and also runs the offshore reservation center which supports the delivery of offshore products from Latam ICG companies.

Margaret joined Citi in 1994 heading the Legal Vehicle Management team at the Latam Offshore Processing Center and assumed the role of Legal Vehicle Controller for the 14 reservation entities in 1998.


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