Globally, fintech is one of the fastest-growing areas sectors and is projected to be valued at over USD 1 trillion by 2032. However, Caribbean countries still seem to be on the fringes of that market, though they would be able to considerably strengthen their position if a regional approach was employed.<\/em><\/p>\n\n\n\n
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From 22\u201424 January, the Fintech Islands conference (FIX25) was held in Barbados. This high-profile event, which draws entrepreneurs and thought leaders from across the Caribbean region and internationally, has become an important nexus not only for financial technology (fintech) but also for tech entrepreneurship in the region.<\/p>\n\n\n\n
However, at FIX25, there were growing calls for a harmonised fintech regulatory framework across the Caribbean to address local challenges, such as financial inclusion, and to create a more investor-friendly environment for global fintech companies (Source: Barbados Today<\/a>). Currently, there is no regional regulatory framework, as a common approach or policy has not been adopted across Caribbean countries. As a result, prospective investors who wish to benefit from economies of scale by investing in multiple countries tend to find it considerably more difficult since each country has implemented its own unique rules and structures.<\/p>\n\n\n\n
According to Fortune Business Insights<\/a>,<\/p>\n\n\n\n
\n\u201cThe global fintech market was valued at USD 294.74 billion in 2023 and is projected to be worth USD 340.10 billion in 2024 and reach USD 1,152.06 billion by 2032, exhibiting a CAGR of 16.5% during the forecast period (2024-2032).\u201d<\/p>\n<\/blockquote>\n\n\n\n
There is thus merit in Caribbean countries capitalising on fintech, but more importantly, facilitating a regional approach to developing that sector, as it is highly competitive with other countries and regions also trying to attract investment and grow their respective markets.<\/p>\n\n\n\n
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Fintech is not just crypto<\/h2>\n\n\n\n
A frequently overlooked factor is how policymakers define fintech. Generally, the term came to the fore when blockchain technology and cryptocurrency became more mainstream. However, fintech covers a broad range of areas including the following<\/p>\n\n\n\n
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- Digital banking, by providing banking services to micro, small and medium-sized enterprises (MSMEs).<\/li>\n\n\n\n
- Mobile payments, which can be facilitated through digital wallets and other technologies.<\/li>\n\n\n\n
- Peer-to-peer lending, though platforms that facilitate short-term financing (e.g. buy now pay later) and payday loans.<\/li>\n\n\n\n
- Crowdfunding, through platforms that facilitate such activities and other financing services.<\/li>\n\n\n\n
- Blockchain, by using blockchain technology to create decentralised financial applications, secure payments, and speed up payments.<\/li>\n\n\n\n
- Insurtech, by using technology (such as blockchain, AI, and automation) to improve the insurance industry.<\/li>\n\n\n\n
- Regtech, by using technologies and platforms to improve the regulation of financial services.<\/li>\n\n\n\n
- Investing, by using fintech to deliver investing services, improve investment analysis and advice, including robo-advisors.<\/li>\n\n\n\n
- Cryptocurrency, by creating and using cryptocurrencies and other use cases of blockchain technology.<\/li>\n<\/ul>\n\n\n\n
It is likely most of the above areas are already being implemented in most Caribbean countries, but the extent to which technology is being leveraged may vary. For example, virtually all commercial banks have implemented online banking, though not all of their banking services, processes, and activities can fully be conducted online. Similarly, with the high proliferation of mobile phones across the region and the ability to transfer top-up credits between phones, the foundation for mobile payments and digital wallets exists. However, for the other areas, full digitalisation has not yet occurred as the appropriate laws and rules have not yet been established, which has hindered their development in the region.<\/p>\n\n\n\n
It is also important that we address areas such as blockchain technology and cryptocurrencies, which policymakers might be wary of. However, in this digital age, where borders and boundaries no longer exist, avoiding blockchain and crypto means that inadequate guidance or protections are being established, although citizens may be using them. It also means that their impact on the economy or the wider society \u2013 good or bad \u2013 cannot be tracked or measured.<\/p>\n\n\n\n
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Still operating in silos<\/h2>\n\n\n\n
We also have to admit that although Caribbean countries know there is greater strength in being unified than divided and can point to evidence of it worldwide, we operate independently of each other. Although the Caribbean Community (CARICOM) exists, and numerous regional commitments or agreements have been made on specific issues or a course of action, many countries do not follow through on what was agreed upon, resulting in the desired outcome either not being achieved altogether, or a much watered-down result being achieved that does not have the hoped-for impact.<\/p>\n\n\n\n
Although it may be argued that as sovereign states, countries are entitled to act as they please to address their own needs, priorities and imperatives, within a regional group or construct, occasionally, there may be a need to act and support initiatives that are \u2018for the greater good\u2019. In other words, if a particular initiative benefits most countries but may have minimal impact in a particular country, that country could consider not objecting to the initiative to derail it completely, but rather allow it to proceed (with reservation if needs be).<\/p>\n\n\n\n
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The benefits of a regional approach<\/h2>\n\n\n\n
Finally, it is important to highlight that although we all know the improved economies of scale that can occur when Caribbean countries operate from a common and unified position, all too often, things fall apart, and we appear disjointed and not coherent. Hence, while we might be prepared to agree upon or make a commitment to a particular matter, our individuality as countries tends to win out and we are unlikely to follow through.<\/p>\n\n\n\n
However, in many instances, a regional focus or a regional effort will likely improve outcomes locally. For example, in the fintech space, establishing a cost-effective, fast and seamless regional payment system would not only allow for the transfer of funds between Caribbean countries but could also facilitate the creation of a larger and more cohesive regional marketplace, which in turn could open up more entrepreneurial and innovation opportunities, along with increasing international investment prospects. Such a scenario is unlikely to be fully realised by a single country of 30,000 or even 3 million, but it becomes considerably more feasible for a collective market size of 30 or 40 million.<\/p>\n\n\n\n
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In summary, fintech could be a significant growth area for Caribbean economies, and every opportunity ought to be taken to better position our countries. A crucial and underutilised strategy is implementing a harmonised approach to fintech sector development. As it currently stands, there is much to gain from addressing this matter regionally than as individual countries.<\/p>\n\n\n\n
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Image credit:\u00a0 rawpixel.com (Freepik<\/a>)<\/em><\/p>\n\n\n\n