Domestic Banking in the Caribbean

Darrel Anderson describes a vision of banking in the future

Illustration by Christopher CozierIllustration by Christopher Cozier

Let us take a journey to the future — and move to the year 2010. A woman is coming home after a day’s work. Her house is locked, but she doesn’t carry keys. All she does is state her name into a voice recognition device on her front door. The system confirms her identity, unlocks the door, and lets her in.

Once inside, she activates her computer by smart card, which transfers her password into the machine. She pulls up some financial records in her investment portfolio, reviews them, prints out the ones she wants, and then transfers $1,000 from her transaction account to her Smart Card. She then transfers $300 to her son’s account, who is away at University and always seems to be short of funds . . .

Later that night she reserves the film The Bridges of Madison County Part III to watch at 10:00 p.m. on her interactive TV, and pays for the purchase simply by having the price debited from the cash that was stored on her “smart” card.

While waiting for the movie, she logs onto the internet, connects to her favourite cosmetics shop in Nassau, and orders a gift basket to be sent for her mother’s birthday in Miami. Again the value is debited from her smart card.

By now it’s ten o’clock. The movie automatically comes up on her TV. But she’s tired of Clint Eastwood and doesn’t like Meryl Streep, so she re-programmes the TV to run the film with Brad Pitt and Demi Moore in the starring roles.

So, we haven’t been watching re-runs of Star Trek!

But we do watch what’s happening in the financial services industry, and we can tell you that what was just described is not happening 12 years from now — it’s happening today all over the world, and will soon be happening in the Caribbean.

Caribbean banks are responding to customer needs in ways that were never considered just a few short years ago, and technology is fast becoming the way in which our clients want to be satisfied. Soon, and for the first time in history, individuals will be able to purchase virtually any service, any transaction and any product without leaving their office, their backyard, or their living room.

In fact, customers from anywhere in the world will be able to purchase our products at the click of a button. This global economy will change the way banks operate. Fundamentally. Employees will be learning sophisticated new skills and using those skills to help customers define improved solutions for their financial needs. Our clients, because of their busy lives, may not visit us in person as much as they used to for routine transactions. Some may NEVER visit us in person.

That’s changed to cause this shift towards technology? There are two answers — time and demographics.

While the Caribbean may indeed be one of the last refuges from the hustle and bustle of North American-style life, personal free time is becoming a scarce commodity. Clients are telling banks that more and more they want to be free to perform transactions where they want, when they want, and how they want. This trend is most visible in the usage of Automated Banking machines. It is estimated that in the Caribbean Basin there are over 25,000 of these machines providing everything from cash withdrawals and bill payments to postage stamps and rolled coins. The amount of transactions processed through these machines grows at almost 50% per year, with no end in sight.

Many banks have teamed together to link their existing ABM networks, through switch systems such as JETS (Jamaica), Carifs (Barbados) and Lynx (Trinidad) as well as international systems such as Plus and Cirrus. These systems allow customers to withdraw funds from any participating bank machines for a small fee. More exciting is the ability of these networks to hook merchants into the system so customers can use their bank cards as an electronic cheque — making purchases instant, and hassle free. These are just a few examples of the way in which banking in the Caribbean is changing to meet the needs of customers.

The second major change that is occurring is the shifting demographics. As populations age, banking needs tend to shift from borrowing and transactions to investment, retirement planning and advice-based services. This trend is changing the face of local branches, shifting them towards being advice centres as opposed to transactional centres — a trend welcomed by clients. In the Caribbean there is also a much larger percentage of young people who were raised with technology as part of their lives; and they want more.

The older demographic has created needs for investment products, particularly those that are equity based (stocks). The organised stock markets in the Caribbean are seeing good growth, and every year more and more companies are placing stock issues into the marketplace. While the mutual fund industry is still in its infancy, it is anticipated that relaxed currency restrictions will cause major growth to occur in this sector.

Another influence on banking in the Caribbean is the “returning resident”. Residents who return home from overseas have often been exposed to the marvels of modern technological banking and are asking for the same products and services to be implemented “at home”.

Banking in the West Indies is a unique blend of influences — we are at the crossroads of Europe, Africa, South America, and North America, and are influenced by all these regions. Banking services in the Caribbean are changing rapidly to meet the needs of the people, and to capitalise on the opportunity presented by our unique geographic location.

Indeed, the future of our region and its ability to transact in a modern financial services world are firmly linked.

Darrel Anderson is the General Manager of CIBC West Indies Holdings Limited.