The FinTech startup ecosystem in the Caribbean is evolving, and the excitement towards FinTech is growing. However, the industry, in general, is not growing as fast as one might think. Of course, there is some growth and innovation to follow.
FinTech development in the Caribbean
Even though there is a running CBDC pilot project, the FinTech development in the Caribbean is moderate. People analyzing the Caribbean region have given multiple reasons why the FinTech industry has not become a major force.
- The banking and financial services ecosystem is underdeveloped. For some Caribbean countries, certain online banking services were promoted more actively only due to the pandemic. Financial inclusion is another aspect, as some of the services might be expensive to access.
- Even though digital adoption is growing, digital literacy is still low. Individuals in the region might have the devices to access online banking services, but a large banking segment still insists on conducting transactions in person.
There are other reasons mentioned, such as the region, in general, having traditionally conservative financial choices, the Caribbean governments still being cautious towards FinTech, and the lack of FinTech awareness in the Caribbean region.
Caribbean’s CBDC
A couple of months ago, the Eastern Caribbean Central Bank launched its CBDC pilot project — DCash, the digital version of the EC dollar. The Eastern Caribbean Currency Union (ECCU) three main drivers for the pilot project:
- High payment costs,
- To better serve citizens,
- Change the culture of sending cheques.
The pilot project runs on a mobile phone app that can be used to make payments to merchants or person-to-person. Even though it is only now accessible using a smartphone and available online, it is a significant step towards financial inclusion.
You can find more on the project’s website DCash.
Who regulates the industry?
When talking about FinTech regulations or FinTech in general, the Caribbean is usually talked about as a part of the LAC region — Latin America and the Caribbean. The supervision of domestic banks is undertaken by the Eastern Caribbean Central Bank. There is no specific law for FinTechs; however, multiple financial services regarding cryptocurrencies are allowed for the private sector.
Sources:
Ledger Insights
ICT pulse
IMF Working Paper
