The First Steps for CeFi (Fintech) in the Caribbean Region
In order to enter the next phase in Financial technical innovation and to become competitive on the world stage, the Caribbean first needs to recognize how behind it is in terms of financial innovation.
Traditionally, most financial institutions have an innovation time horizon or innovation maintenance/migration/replacement schedule of about 10 years. This has been the case for decades when IT infrastructure was being innovated in a semi-linear fashion. In the last 20 years however, the Caribbean has lacked the amount of innovation and developments that have been growing exponentially elsewhere around the globe, far exceeding this time horizon.
Given this exponential innovation change, the use of APIs allow financial institutions to enable third-party developers to build applications and services. This will also provide greater financial transparency options for account holders by using open-source technology.
An example for the Caribbean region if innovation is widely embraced:
A financial entrepreneur develops a mobile application that allows users to invest in securities and other financial instruments, free from commission fees. This mobile app interacts via an API to other local or regional financial brokerages that also interact using APIs.
The customer using the mobile app performs the following transaction:
- Initiates a transaction using the mobile app which is sent to the local or regional financial brokerages who are competing for the best price using APIs creating an open, transparent, and regulated market. They also interact with financial banks via API for real-time information to potentially initiate liquidity discovery to execute transactions.
- A transaction is sent to list members at a Securities Exchange, one of many international exchanges for the listing and trading in both domestic and international securities, or directly to the Securities Exchange, that uses APIs for its innovative interaction members, list advisors, and brokers.
These financial banks provide regulatory information to the country’s central bank also via API. All of this can happen in real-time using this mobile app.
This one company brings the following benefits to the country that it provide services to among others:
- Employ local/remote talent
- Provide financial services to more residents/citizens
- Become competitive on the global stage
- Improve overall GDP
- etc.
This example depicts the urgency for the Caribbean region to adopt open banking since these solutions are already in production globally.
To enter the next phase in financial technical innovation which will provide an economic incentive and boost a critically affected economic region, the Caribbean needs to recognize how behind it is when it comes to CeFi (Fintech) financial innovation.
