Banking under covid19

Above: Wendy Delmar. Photo via CAB.

BitDepth#1252 for June 04, 2020

In a recent edition of CANTO’s Conversations series, Wendy Delmar of the Caribbean Association of Banks (CAB) offered an overview of how the regional banking sector had coped with the challenges of doing business during the restrictions imposed to manage the spread of Covid-19 in the region.

CAB was not immune to these challenges. On March 16, the association dispersed to their homes to continue their work monitoring and guiding the response of 80 members and partners in more than 20 Caribbean territories to the threat of coronavirus.

“The banking sector was able to come together very quickly to consider the issues,” Delmar said.

“The first thing that would have been done is loan moratoriums for three to six months. There was a lot of sensitisation on using online banking and banks that normally would have operated in competition worked together to get that message out.”

To make capital more accessible, the Eastern Caribbean Central Bank (ECCB) reduced the discount rate by 4.5 percentage points to two percent to provide low-cost, short-term credit.

“Indigenous banks have made tremendous efforts to provide financial options that would have assisted the countries themselves in raising themselves out of financial hardship that they would have been facing,” Delmar said.

Delmar’s team was able to evaluate the performance of the banking sector in the aggregate across the region.

There have been no layoffs in the sector and no pay reductions.

“We have seen an adjustment among customers, and with staff working from home,” Delmar said.

The CAB boss warned that banks would do well to prepare to hold the hands of customers who are either challenged by age or literacy to get them accustomed to accessing banking services in new ways.

“There will be a cost in maintaining the old way of doing things while preparing for greater use of new technologies.”

Delmar also believes that there will be other significant challenges facing the banking sector because of the changes during covid19.

She warned of the mental challenges, psychological challenges arising from having staff working remotely in a very different, independent mode.

“While we do recognise that change is coming, we must also be mindful that not everyone may be comfortable with it.”

“If there is a reduction in people coming into the bank for simple transactions,” she asked, “is this a fundamental shift in the mindset of consumers?”

“Is there an opportunity to reinvent the product offerings that we have if we are able to recognise changed patterns in our consumers?”

CAB has found that corporate and individual customers make more use of online banking services, but small businesses still want to see their money going into their accounts.

“While we do recognise that change is coming, we must also be mindful that not everyone may be comfortable with it.”

Noting that the cost of introducing FinTech can be daunting, the emergence of indigenous banks as business replacements for migrating international banks brings new challenges to keep pace with technology developments in the service of customers.

Banks, she believes, have proven their agility and have tested their business continuity plans, but that does not mean that there is room to relax.

With employees operating from home and an increase in the use of online systems by both customers and workers, there is a commensurate increase in cybersecurity risks.

“There was a spike in ATM fraud in one of the islands and one of our members was the victim of a cybersecurity attack. CAB continues to provide support.”

CAB encourages banks and other financial institutions to continue training in Anti-Money Laundering and Combating Finance of Terrorism (AML/CFT) procedures.

“Any attack on the financial services sector is an attack on the country’s economy,” Delmar warned.