Digital Banking Gains Interest In Caribbean, Who Are Key Players?

Financial technology has had an interesting year. On one end, it continues to be projected to become a $1.5 trillion Industry by 2030. On the other hand, fintechs and other digital banking institutions are facing a “funding winter”, with venture capital funding of fintech startups having plunged globally by 49% year-over-year to $23 billion in the first half of 2023.

Among the key trends that has helped ensure that the former is still on track despite the latter still happening is digital banking continuing to gain interest in key locations across the globe. Among those emerging markets? The Caribbean.

A Large Population of Unbanked Customers

The home of almost 45 million people, the subregion of the Americas that includes the Caribbean Sea and its islands is among the most populous areas in the world. For context, its residents account for the equivalent of 0.55% of the total world population, and is significantly larger than that of Canada’s 38 million residents and just trails Spain’s 47 million.

Unfortunately, an estimated two-thirds of the Caribbean’s residential population remains unbanked. According to the Inter-American Development Bank (IDB), a significant unbanked population exists throughout Latin America and Caribbean overall, with approximately 26% of adults in the LAC region not having a bank account in 2021.

The restrictions that resulted from the Covid-19 pandemic made it further evident how vulnerable locals are without digital access to financial services, even if they were able to access traditional banking.

The Rapid Emergence of Digital Banking

Fortunately, the silver lining from the past global health emergency has been how it has served as a catalyst for growth in the use of digital financial services in the Caribbean. The popularity of digital payments expanded on a global scale during and post-pandemic, driven by a preference for making payments digitally and the growth in e-commerce that helped drive broader expansion of digital banking.

Fast forward to today, and slew of new digital-first banking solutions are now providing previously underbanked consumers across the Caribbean access to financial services. Those who are already banked, on the other hand, have also discovered the ease and convenience of being able to manage their finances and transact from the comfort of their home and at the palm of their hands.

In fact, according to The Oxford Business Group, the number of fintech platforms across the LAC region grew from 703 in 2017 to 2,482 in 2021, or 22.6% of the global total. Some of these have become key players in the continued growth of digital banking in the Caribbean:

Black Banx

Founded by German billionaire Michael Gastauer in 2014, the Toronto-based global digital banking company continues to have a substantial presence in the Caribbean. The LAC (28%) is among the key regions Black Banx operates in, second only to the Asia Pacific or APAC (33%), and more so than the likes of  North America (21%), the Middle East and Africa or MEA (12%) – which notably has grown significantly this year, and the regions of Europe, Iceland, and Norway (6%).

Offering accounts in 28 FIAT and 2 cryptocurrencies to both private and business clients across 180 countries, Black Banx has not only substantially eased access to banking for its customers in the Caribbean, but has significantly opened up the global economy to the region.

Among its significant achievements has been transforming cross-border payments and setting a new standard in local finance. By leveraging and connecting through the Black Banx platform, local real time settlement systems in the Caribbean have been able to facilitate quick, cost-effective international money transfers..

Whether locals are looking to make the most of remote work opportunities from other countries, are considering expanding their businesses by targeting customers outside their region, or are looking to increase tourism in their area, they can continue to count on Black Banx to make any and all transactions associated with these goals easy, secure, and completed in real time.

Mastercard and CAB

Mastercard, one of the most well known financial institutions in the world, had recently announced signing a Memorandum of Understanding (MoU) with the Caribbean Association of Banks Inc. (CAB).

The central objective of the partnership between the global technology company in the payments industry and the representative body and recognized voice for banks and other financial institutions in the Caribbean is to enable cross-border payments across all CAB member jurisdictions,and tend to the region’s unbanked and underbanked populations and bolster financial inclusion and economic growth.

As part of its commitment, Mastercard will reportedly activate its technology, resources, and expertise to help banks successfully integrate this innovative solution into their product offerings, as well as share its knowledge and educational platforms to raise awareness among citizens and small business owners on the benefits of this service and other digital financial tools that can help them reach their fullest potential and improve their living standards.

Sagicor Bank Barbados with MBanq

The Caribbean’s first fully digital bank, Sagicor Bank Barbados has expanded its operations by way of a partnership with US-based fintech Mbanq.

By using the latter’s Banking-as-a-Service (BaaS) platform, Sagicor Bank’s customers in the Caribbean are now reportedly able to open deposit and savings accounts quickly, access virtual and physical cards, loans and mortgages and make payments domestically and internationally.

Through these “branchless” digital financial services, Sagicor Bank aims to offer customers a low cost and more efficient alternative to traditional banks.

As digital banking continues to gain interest in the Caribbean, more players are expected to emerge and make a play for a position in the local market. This can only be beneficial to local customers, as their basic banking needs are better met, and even their more unique requirements are better addressed with the various options becoming available.