Firstly, I believe that governments, financial institutions and even telecommunication powerhouses in the region should do their utmost to support and encourage the development of digital finance tools by technology companies, particularly those that are based in and focus on the Caribbean. The development of these solutions provides an excellent breeding ground for creativity, ingenuity and technical development. Furthermore, these are solutions to existing problems that leave our economies stagnant and moribund. Digital financial tools are saving us all from a quagmire of queues, time-sinking traffic and unnecessary losses in productivity. More importantly, the development of local and regional tools will reduce the flow of foreign reserves to international alternatives, i.e. PayPal, Apple Pay, et. al.
Secondly, governments should consider extending regulations similar to those of credit unions to digital finance companies that accept and hold funds for indefinite periods. Such a development should allow these new entrants to engage in deposit insurance schemes and gain commercial liability insurance sufficient to mitigate criminal events leading to loss of funds.
However, to maintain the ability for persons to use non-cash payment methods, governments – perhaps at the level of CARICOM– should create guidelines for non-interest bearing transactional accounts that both financial institutions and technology companies could accommodate. The Bank of Jamaica has already authorised certain companies to provide retail payment services to the general public. GraceKennedy Payment Services Limited, one of the licensed providers, offers its own mobile money solution - called Mpay - for those who don’t have a bank account but do have a mobile device. After a successful nine-month pilot project, this solution is being offered throughout Jamaica.
Smart limits that comply with existing anti-money-laundering legislation could include account thresholds of US$1000.00 that could be set up with a proper provision of required identity on application. Restrictions on deposits, internal account transfers, number of transactions or amount spent per day could also be implemented to reduce the ability for illicit placement, layering or structuring. Developing a local or regional account identification specification could then allow for non-cash payments to be seamless for public transportation, purchase of school meals, payment of social benefits etc.
Additionally, government taxation bodies, parastatal boards and financial companies both traditional and digital should meet to define frameworks for the secure maintenance and transfer of personal and financial information. Within CARICOM, the government of Trinidad and Tobago has led this charge, having developed a national cyber security strategy in 2012 and introduced the Trinidad and Tobago Cyber Security Agency Bill in 2014. Strong encryption and anti-intrusion elements should become a standard part of every transaction, much like how chip and pin credit cards have become the gold standard in card safety. Education of the general public should be a high priority, particularly as the spread of mobile devices allows easier implementation of security measures such as two-factor authentication, where, in addition to the usual username and password, an algorithm-generated, singular use passcode is sent via SMS or on separate token software. This code must be entered before any transaction request can be executed.
Finally, an overarching service standard, very similar to that provided by Caribbean Integrated Financial Services Inc. (CarIFS), should be defined and formally proposed by all those looking to implement digital financial solutions and communicated effectively to the public, such that everyone knows what to expect when using these tools. In addition, the standard would provide a level starting point for customer service expectations and allow neutral arbitrators such as fair trading or fair services commissions to effectively oversee the sector.
With a combination of frankness, ingenuity, forethought and consideration, I believe that we can mitigate the differences and dangers facing the digital finance field, thereby unlocking great economic potential by reducing or eliminating risky, tiresome processes and making our financial systems more inclusive.