Promoting mobile financial services

With Barbados and most Caribbean countries struggling to experience favourable economic growth, regional governments are being told that the development of a mobile financial service system has the potential to impact positively on their Gross Domestic Product (GDP).

This observation came from Dr Maurice McNaughton, director at the Centre of Excellence for IT-Enabled Innovation at the Mona School of Business, who told participants at a one-day seminar this was based on research carried out in Jamaica about four years ago.

The University of the West Indies, Mona Campus official was speaking at the seminar dubbed ‘Prospects for Mobile Payments in the Caribbean: A Public/Private Partnership Perspective’, held at the 3Ws Oval.

Making reference to a 2011 mobile market research carried out in Jamaica, McNaughton suggested that one of the reasons regional economies were “stuttering” was because people did not have “transactional accounts” whereby they were able to carry out mobile payments and mobile money transfers.

Dr Maurice McNaughton, director of the Centre of Excellence for IT Enabled Innovation at the UWI Mona Campus.

Using government agencies as one example, McNaughton argued that through such a system regional governments would save millions of dollars on administrative costs and also save time, which would ultimately lead to increased productivity.

“It could significantly reduce government operational cost [and] provide a stimulus for financial inclusion . . . it is about using a model of a mobile payment services provider that delivers those payments on behalf of the government. Those payments are made out through this provider and beneficiaries have their mobile wallet or whatever you want to call it, and they get a notification ‘your payment has been made’, and you can go and cash it out at a cash out point or whatever you want to do with it,” McNaughton explained.

“In our economies, government is by far the largest employer, the largest transactor, the largest purchaser, so they exert their due influence on the efficiency of the economy.”

McNaughton said the government therefore had a significant role to play in the establishment of such mobile transaction system.

However, he acknowledged that such a move would require the right mix of regulation, guidelines for competition, policy and consumer protection, as well as establishment of standards.

In addition, McNaughton said there would be a need for a business model, consumer readiness and research.

“And importantly governments can drive volume,” he added.

He noted that for over five years Jamaica has been struggling to implement a system based on a model in Kenya known as the M-PESA. However he said done of the challenges facing the region was “we are just too cautious rather than adaptive”.

McNaughton also suggested that the region learn from mistakes, best practices and guidelines from countries that have either tried or succeeded with similar projects including Mexico, Haiti, Brazil and Kenya.

“I think it is something worth talking about.

“The evidence is clear in other places that mobile financial services can impact development and influence GDP. We won’t get into what the rates are,” he said.

However he insisted that if the region was able to improve commerce by at least 20 per cent that would have a significant impact on economic growth.

According to him a critical part of the decision regarding a mobile transaction system was to determine who would build and operate it.

“Is it the central bank, is it Government, is it private sector? That is the fundamental question. We know it is a good thing to do but how do you do it, how do you make it happen? That is the question that confronts us,” McNaughton said.


7 Responses to Promoting mobile financial services

  1. J. Payne November 21, 2015 at 4:31 pm

    That would require some enabling legislation. Caribbean banks don’t let Caribbean people hook into many online services. Try connecting a PayPal to an inexpensive Caribbean bank account. Or Apple Pay, or Xoom, or Ebay, or Android’s money service, or other online money movement services. Caribbean anti-money laundering rules too strict.

    • Dwight November 27, 2015 at 8:06 am

      Yes, I couldn’t agree more with what you said.
      The Caribbean banks are too strict with their online services.
      Where I’m from (Suriname), you have to get an expensive credit card in order to enable something so simple as PayPal or Xoom.
      But I don’t know if that’s due to the anti-money laundering rules.
      Maybe it’s a way to keep costs down, because even though these services are called online banking, still a lot has to be done manually to run those services.

  2. Joel C. Payne
    Joel C. Payne November 21, 2015 at 4:32 pm

    That would require some enabling legislation. Caribbean banks don’t let Caribbean people hook into many online services. Try connecting a PayPal to an inexpensive Caribbean bank account. Or Apple Pay, or Xoom, or Ebay, or Android’s money service, or other online money movement services. Caribbean anti-money laundering rules too strict.

  3. Sue Donym November 21, 2015 at 5:50 pm

    There is no shortage of information on mobile financial technology. In the five years or so since Square technology seemed to be at our doorstep, enterprising business people have been trying to persuade banks here to move with the times.

    In a region that depends heavily on tourism, this is ideal, since the nature of many transactions is impulsive. Buyers are often driven by sights, atmosphere and sentiment, not the think about it and return spending process.

    The nowness of the technology is convenient for both buyer and seller and we stand to gain a lot more than lose if this were embraced.

    @J. Payne Barbadian financial rules often look a lot like anti-commerce rules. Then we don’t understand why other economies are leaving us in the dust.

  4. Lawrence Griffith
    Lawrence Griffith November 21, 2015 at 7:06 pm

    This is a very good move, it started in Africa 10 years ago and is very good. If you can do business without the big banks you save money.. Business transactions are faster and cheaper than western union. I been using it in Kenya and are very happy.. We have it here in Sweden 3 years now and it’s free and easy to pay anything.
    The only negative about it is the establishment can track every transaction and location.. But I am still using cash to stop big brother spying on me.. Sweden want to be the first cashless country in 10 years. That means the establishment will have control over your life. If you owe a debt they take it when they want. You have NO control over your financial situation..

  5. jrsmith November 22, 2015 at 11:55 am

    @,Lawrence, G, hail, hail, good comments, but to further add , Sweden, stands as Sweden ,they economy is not influence, by , cartels.

    The trouble with the region, is the varying standards of living , the varying currencies and exchange rates. Barbados cannot accept , what is offer to others in the region ,because our Barbados , starts from a much higher base line , even as many countries out side the region.

    The telecoms industry, in Barbados must be more open, we need more competition, technologies in this area is cheap , bags of it , from the position at present , where we have a large player as the cartel, squeezing whatever out us, with promises of a better service to our public.


    In some developed countries we have seen , how political corporate corruption , in this industry, has caused mayhem, .Barbados is now feeling the heat of the big corporate players.

  6. jrsmith November 22, 2015 at 12:06 pm

    Our banks ,in Barbados, its ok to read about technology, but to use the same, staff must be trained to do so. they are not willing to , innovate. we will be at the same crossroads , years from now. dinosaurs.


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