CAB conference looks to the Future of Banking and the path to Regional financial prosperity
WILLEMSTAD - The Caribbean Association of Banks (CAB) concluded its 43rd Annual General Meeting and Conference under the theme: “Caribbean Banking: Fresh Tools, New Thinking” in Curacao on 16th-19th November, 2016. The conference served as a watershed event for banking stakeholders around the region to discuss the challenges facing the industry and to explore relevant solutions.
The event provided a stimulating platform on which industry leaders discussed strategies which could potentially assist in achieving their corporate goals. Leaders were cognizant that risks have to be effectively managed while satisfying compliance requirements and leveraging the advantages of the FinTech economy.
The Chairperson of CAB, Ms. Joanna Charles in her Welcome Remarks highlighted the many challenges as well as the opportunities which the Region currently faces. In particular, she made mention of the de-risking phenomena which is threatening to be a crippling force in the industry and urged the stakeholders to collaborate in an effort to find a solution. Ms. Charles struck a tone of urgency when she said: “The survival of our financial industry, and by extension, the economies of our region are constantly being challenged by internal and external shocks, but I am confident that the resilience of our Caribbean Spirit will provide us with the necessary insights and strength to remain afloat. However, given our current realities, we must call upon the Caribbean Community (CARICOM) to provide technical assistance and institutional support for the adoption and implementation of a more harmonized legislative and regulatory framework, to facilitate the effective functioning of the regional financial industry.”
Ms. Charles went on further to highlight the CAB’s effective advocacy efforts by way of representing the Region at the highest level of regional and international stakeholder discussions. She also commended the efforts of the OCC[i] and the FATF[ii] in producing guidance for correspondent banks to follow before deciding to terminate the account of a Respondent bank. While this is a commendable effort, the CAB’s Chair reiterated that more must be done to prevent and mitigate de-risking.
The Feature speaker, Minister of Economic Development of Curaçao, Mr. Eugene Rhuggenaath expanded this theme by presenting the audience with the reality of how the world perceives our Region. He cautioned the audience that while we may perceive ourselves as separate countries with our own governance structures, the reality is that globally we are perceived as one Region. When one country is affected by a certain event, it impacts the entire Caribbean and is viewed by the world as a “Caribbean Problem”. He issued a call for the countries in the Region to work together and establish functional corporation mechanisms to increase efficiency, reduce costs and expand our sphere of influence.
The Keynote presenter, Mr. Oz Eleonora, Founder and Principal, Zinica Group opened his address with a thought provoking question: “What will banking look like in the future?” While he cautioned that no one knows the future, he beckoned the banks to look towards Africa for a glimpse at how FinTech innovation, such as M-Pesa, a phone based money transfer and microfinancing platform, is rapidly changing the market dynamics of the global financial system. He proffered that, the consumer’s greatest need is Service, Security and Trust and implored the banks to study market trends which would enable them to identify the way in which technology can be leveraged to meet those needs, with increasing efficiency.
Mr. Eleonora posited that the traditional role of banks is being challenged by innovations such as peer-to peer lending, cryptocurrencies and branchless banking. Banks should not resist these changes but accept their role as a trusted third party through which two exogenous parties may do business. Banks, he advised, must learn to leverage the opportunities presented by FinTech.
The conference highlighted the scope of the game changing trends and thinking, as well as new tools which should be leveraged to ensure the survivability of the financial industry. The key areas emphasized for action were:
- Regional banks should go above and beyond compliance with AML/ CTF and tax regulations to stave off the loss of correspondent banking relationships. Caribbean jurisdictions should conduct in depth National Risk Assessments and fill any gaps identified. Regional regulators should ensure strict supervision and enforcement of all regulatory requirements, and Respondent banks should show a willingness to be transparent, by ensuring that their compliance frameworks are in accordance with international standards.
- Regional banks should continue to do their utmost to facilitate the implementation of Basel II. It was emphasized that banks will have to increase their capital to support their risks and amalgamation may be a viable route to accommodating new capital adequacy requirements.
- Banks need to make greater use of social media to engage and build positive and responsive relationships with their customers.
- Leadership and talent management will continue to be a major differentiator in business performance, hence banks will have to strengthen their leadership capabilities and cultivate an organizational culture which promotes talent identification and development.
- The financial ecosystem has evolved to a more decentralized form and banks will need to improve their internal processes, increase the rate of adoption of new technology and be proactive in identifying new revenue streams to remain viable.
The conference also received the support of regional and international sponsors who provide technological and professional services to the financial industry.
The CAB continues to support its members through advocacy, up to date training, growing member and partner networks and engagement at all levels in order to build a resilient financial services sector.
The premier CAB Conference and AGM is scheduled to be hosted in the Dominican Republic, November, 2017.