In a previous column, I lamented the fact that an economy comprises various distinct components with massive amount of interactions among them so much so that developments in one segment tend generally to affect outcomes in others. And that is particularly true in the case of the financial sector, which this author deems the heartbeat of the economic life of a country given the nature of activities undertaken within that imperative element of our economy.
Consequently, the widespread changes taking place within the financial sector in the OECS have not gone unnoticed by me andhopefully would not have escaped the attention of all and sundry, particularly those charged with the responsibility of regulating, promoting and protecting this vital sector. For example, walking through the smaller towns in the OECS highlights the changes that are about to happen. Buildings which used to house prominent banks are now left vacant with hundreds of unemployed bankers in the region. The bad news is that the number is growing.
In the prevailing environment we as a people have an important decision to make. Do we want to continue with the status quo or do we demand change – change that is designed to restore stability in this critical sector that can redound to the benefit of individuals, businesses, governments and the economy as a whole?
To demand change, we have to recognise and accept that banks in the OECS and indeed the wider Caribbean are in desperate need of a real “shake-up”. This means we have to undertake a comprehensive re-evaluation of the existing banking models in the region, who those institutions serve and, equally important, how they serve.
In short, our banks are faced at the moment with the simple choice of “innovate or die.” What is amazing in the present environment is that the USA’s financial sector is experiencing an incredible change following the 2008/2009 global financial crises that witnessed the “crash” of key banks in that country.
Today, as a result, banking is no longer just for “banks”. Financial technology firms known as Fintech are now popping up and fast becoming major players in the financial sector.
The importance of the Fintech tale in the context of the financial sector in the OECS and wider Caribbean is that new innovation is allowing banks and other financial institutions to unlock the resources needed to be mobilised to the sectors which need them mostly. But for such successes to be replicated here in the region, progressive thinking, visionary bankers who will lead the sector beyond rubber-stamping and bureaucracy must rise up and be counted.
After all, our banks ought not to forget they are working for the people who are entrusting them with their hard-earned money. Service levels which are abysmal in too many instances and the almost complete neglect of the small and medium enterprise (SME) sector have to be addressed as a matter of urgency before any real changes can be realised in our banking system.
You know, as often as we dare, any calls made for meaningful changes in the OECS and wider Caribbean, irrespective of the nature of the changes; talks of all sorts of constraints emerge and occupy front pages. Clearly, with respect to the creation of a new banking era in our region, the critical factor cannot be one of limited financial or other resources; it’s a matter of will, period!
In recent discussions with a hard working small entrepreneur, your humble servant was told not only has this person has been waiting for two months to get a bank account opened, but when he went to a credit union for a small loan which was secured by two vehicles and excellent cash flows, he was declined for no good reason. Is that how banking should be conducted? Is that how risk takers ought to be treated by our financial institutions? Is that scenario a model for success or clear failure when it comes to entrepreneurship and the advancement of such innovations?
Operationally, it is quite evident that banks in other parts of the world remain open late hours to facilitate customers. They make it simple and easy to transact. And, most importantly, they demonstrate they want their customers’ businesses.
Do the banks operating in the OECS and the wider Caribbean function in such manner? Are those practices the norm in the region?
No wonder why the banks here are closing down one after the other.
Where do we go from here, Mr. Banker? Are you not aware that we are indeed in a new banking era? What changes are you prepared to undergo in order to remain relevant and make your rightful contribution to national development through effective services to your customers and by extension the countries of the OECS?
(Dr. Francis, a former Permanent Secretary in the local Ministry of Finance, is currently a Senior Lecturer in the Department of Economics at the Cave Hill Campus in Barbados of the University of the West Indies)