The conversation may have revolved around big data on Wednesday, but TTIFC CEO John Outridge pointed to a more intimate issue, the large number of TT citizens who are classified as unbanked, and who in this case have even been described as “unbankable.” . “
These are the 200,000 people who are not part of this country’s formal financial sector, doing most of their business in cash – one-sixth of the country’s population.
It is true that any alternative system must recognize that large sectors of the unbanked economy may well be criminal in nature, and financial diligence is an unwavering aspect of today’s business models.
But it’s hard to imagine a path to a cashless economy when such a large part of the country’s population either lacks faith in the formal financial sector or is prevented from participating by onerous restrictions.
This number coexists with survey figures collected by the Development Bank of Latin America which total 1.5 million bank accounts, 700,000 debit cards and 200,000 credit cards used. Among card users, the survey suggested that these financial instruments are only used 40 percent of the time.
Those who obviously have a lot of it, while those who don’t have no access.
Finance Minister Colm Imbert acknowledged the situation, agreeing that it was easier to get a bank account 20 years ago.
While online and digital bank transfers have unquestionably increased during the pandemic, there has been no groundbreaking institutional response to the challenges facing the unbanked.
An older bank customer who is new to digital, or a new, young customer, is likely to experience disproportionate difficulties during covid19 in dealing with an already recalcitrant banking system.
Even experienced customers struggled when two large banking institutions upgraded their systems online and sent their customers into financial free fall for days, if not weeks.
Banks are not doing enough to proactively come up with alternative systems to support due diligence.
Young people who rent or live with their parents have no utility bills; and banks do not accept mobile phone bills due to an outdated notion that there must be proof of financial responsibility for a fixed connection to a residence.
On this basis, thousands of young people cannot overcome the first hurdle to creating an identity in the formal banking economy. It’s a curious approach to customer acquisition.
Some determined young people and even their elders house their businesses in credit unions more open to eligible customers, but few have the weight of the big banks.
These issues have not been addressed by a particularly risk-averse banking industry – which is busy contracting its physical locations in many densely populated communities.
This leaves intelligent and enterprising people shut out of a system and labeled, unfairly enough, “unbankable.”