The Future of Banking in T&T
January 12th, 2024
By Kay Baldeosingh-Arjune
Trinidad and Tobago’s (T&T’s) banking and financial sector is ensuring it remains strong, stable and relevant by responding to changing customer needs and technology, and new environmental demands. Here, the Bankers’ Association of Trinidad and Tobago (BATT) provides insights into the key trends shaping the future of banking locally.
How has digitalisation impacted the local banking sector and its customers?
The local banking sector has embraced the digitalisation trend because it is important for the banks to remain competitive and relevant in the market; it provides an opportunity to grow and develop their business through creativity and innovation, and it is an opportunity to give customers the best experience as they interact with the banks’ products and services and most importantly their brand.
Through digital solutions, banks have been able to enhance their operational efficiency; for example, the use of online distribution channels has reduced investment in branches. Financial inclusion has also been improved by providing opportunities to reach the unbanked and underbanked. According to the National Financial Literacy Programme’s (NFLP) national financial literacy survey, approximately 19% of the population in 2022 is unbanked.
Some of the more recent digitalisation offerings from the local banking sector include:
- Partnership with Fintech (financial technology) companies to offer new solutions. Introduction of Digital Wallets to include the unbanked and provide greater access to cash. Persons can receive cash from their peers and employers without having a bank account.
- Access to cash from the ATM via an SMS code.
- One bank launched a fully digital branch showcasing its digital offerings and functionalities.
- Some services can now be done online, e.g. opening bank accounts and applying for loans.
- The banks also launched electronic cheques in February 2023.
How has the growth of digital banking affected security and fraud mitigation?
As the use of digital banking increases, fraudsters will find new ways to exploit the system and customers. Financial institutions have the balancing act of managing fraud and staying abreast of the new and evolving fraud typologies while keeping customers at the centre of their strategy. Fraud is a disruption for both banks and customers; it can impact staff productivity and customer convenience. Banks must spend time and resources solving the issue each time a situation occurs. Therefore, banks need to invest in robust fraud detection and prevention systems to maintain customers’ confidence in the banks’ products and the overall financial system and, relatedly, protect the bank’s revenue stream.
Are local banks concerned about sustainability issues?
If citizens and businesses do not engage in sustainable measures now, then Trinidad and Tobago may not have the future it wants. Local banks have already begun to focus on environmental, social and governance (ESG) concerns, where they have integrated sustainability into their businesses. There is a growing sense of urgency that action must be taken now, even more so after the COVID-19 pandemic, which underscored the critical importance of disaster preparedness and community planning.
Banks are taking the lead by financing activities that will support the overall global effort for climate change and build climate resilience. This initiative is called ‘green financing’, where customers can access lower interest loans to purchase electric vehicles or invest in infrastructure that supports green projects such as solar power, green buildings and so on. Some banks have invested approximately TT$100 million in green financing.
If, as a country or individual business, we do not start now to engage or support sustainable measures to reduce our carbon footprint, we will not have the desired future. Banks are best placed to support or influence change for businesses willing to engage in climate change initiatives.
As a country, more can be done cohesively and collectively. With respect to the banks, progress is being made. Some banks, such as Republic Bank, have signed on to the UN Sustainable Development Goals (SDG) goals and joined the Net-Zero Banking Alliance to achieve these goals by 2050. Over the last three years, Republic Bank has engaged in customer agreements and partnerships with the aim of promoting sustainability. Newly built branches are being designed from a conceptual level with green energy in mind.