The future of financial institutions in the Caribbean is under serious threat if no pro-active collective action is taken now. Regulatory changes within recent times have made it increasingly difficult with an ever increasing demand on financial resources just to keep up with the pace and breadth of change. If this trend continues financial institutions in the Caribbean region could be severely challenged to provide the level and types of services to its customer base. The impact of this could ultimately result in high unemployment rates, brain drain, poverty and even economic chaos in the whole region.
This was the main concern of participants of the workshop ‘Caribbean Banking and the Caribbean International Financial Services Sector’ which was held in Curaçao on September 30-October 1, 2015 by the Caribbean Export Development Agency (Caribbean Export) in conjunction with Caribbean-Central American Action (CCAA). The workshop acted as a precursor to the Global Forum of the Organization for Economic Cooperation and Development (OECD), scheduled to take place in Bridgetown, Barbados, in late October 2015.
“It’s a critical time for all of us”, said Pamela Coke Hamilton, Executive Director of Caribbean Export during her opening remarks. “We are increasingly vulnerable to regulatory changes that threaten our existence.” Ms. Coke Hamilton proposed to establish a proactive Regional Secretariat to act as a rapid response mechanism to address issues of a regulatory nature as well as other matters affecting the Region’s financial sector. This body would formulate policies and positions for the Region based on evidenced based research amongst Member States. “We don’t have time to play small country egos, but we have to make decisions on a joint approach that covers our common needs. We are very good in the Caribbean in knowing that a train is coming; in being well informed about the timetables when the train is coming; seeing the train coming; and then panicking when the train leaves without us. This continuing inaction has to stop now.”
The Honourable Donville Inniss, Minister of Industry, International Business, Commerce and Small Business Development of Barbados during his welcome address agreed that the “time to act is now, not tomorrow”. According to Minister Inniss one of the major challenges in the region is that Ministers don’t have the international financial services on their agenda. “Few of us let our presence be felt and our voices heard on international events and issues that matter”, said Minister Inniss, who also pointed out that not enough human resources and marketing are invested into promoting the sector. “We should take our cue from the tourism industry”, he said. “In general tourism contributes less to the national economies in the Caribbean than the international financial services sector. However, more resources are invested by governments in promoting their tourism than into the financial sector.”
The Minister also pointed out that countries in the region don’t share their knowledge enough and are not engaged enough with each other. “Most of the times we don’t even know who is in charge in a neighbour country. We are afraid that if we share information, we will lose a part of the pie. However, there is enough of the pie for every one of us. Sharing experiences will strengthen each of us, not weaken us.” Minister Inniss concurred that establishing a Regional Financial Services Secretariat would benefit all financial services in the region. “We should take ownership of the issues, identify our partners and start responding rapidly.” Finally, he made a call for greater dialogue with colleagues in the region and with partners in Africa and Latin America to broaden our sphere and influence.
Ambassador Videtic, Head of Delegation of the EU to Guyana, Suriname, Trinidad & Tobago and the Dutch Overseas Countries and Territories in his address noted that “a well-functioning and efficient financial services industry and legal framework is essential for the economic development of any region but even more for the Caribbean.” He further stated that “the financial services industry provides ways to secure transmission of funds from the diaspora back to the region; it provides credits to small entrepreneurs and bigger companies creating growth and jobs. They provide essential services facilitating trade.” In concluding, he indicated that “the industry may face serious challenges such as increased global competition, stricter regulations and unpredictable markets, but with a coordinated effort by all parties they can be surmounted, putting the sector in a position to further increase its beneficial contribution to the region.”
During the first discussions following the opening notes, Paul Byles, CEO of the 1st Regents Bank and Trust on the Cayman Islands noted that the international perception of the Caribbean region is negative and one that is persistent. “Most of us have invested heavily in meeting compliance rules and into having mechanisms in place that identify risks”, Mr. Byles said. “However, we compete with a tenacious perception, fueled by Hollywood, television and all other media that our region is a corrupt, tax avoiding, whitewashing, and drugs-benefitting area.” Mr. Byles agreed that the stake holders should take ownership of the issues facing the region and start acting as one to the outside world. Byles: “In our small country mentality we find it important to stress that our country is excelling in complying in this, while another one might not. But the institutions and persons who are enforcing these new rules don’t see individual countries. They have this persistent negative view that blurs their vision. That is why we should start acting together to change their perspective.” He endorsed the call for the establishment of a Regional Financial Services Secretariat as being a step in the right direction. Wayne Shah, Board Member of the Florida International Bankers Association also echoed similar sentiments in his contribution stating that “global rules are here to regulate the global trade –the Caribbean needs to respond to the issues and learn to play by the rules” He further stressed that “the Caribbean must participate, be present and learn the rules.”
The workshop heard from other presenters about the challenges facing the remittances sector as well as the issue of the loss of corresponding banking relationships faced by the banking and financial services sector as a whole. The impacts of these actions were well documented by the panelists present. The region now needs to coalesce around the prevailing view of having a coordinated response to external decisions affecting the sector.