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BATT signal on financial technology
As the world embraces cryptocurrencies and other financial technologies, how far behind or advanced is T&T?
Is this country poised as a Caribbean leader, or is it a follower to world giants?
More importantly, is there infrastructure here to support the advancements now gripping the world?
There questions were brought to the fore during a seminar presented by the Bankers Association of T&T (BATT) and Deloitte, Trinidad, Understanding Financial Technology Disruptors: Demystifying the Hype Versus Capabilities, at the Hyatt Recency, Port-of-Spain.
Among those in attendance was CEO of the American Chamber of Commerce of T&T (AmChamTT) Nirad Tewarie, who agreed that T&T can be a leader but felt the right environment must be created, especially if the country is expected to move to first-world status.
“Right now cryptocurrency is a space for the educated investor but unless we create the environment for people to get involved we are really going to leave it in the space of those who have the resources,” he said.
“Right now to get a mobile wallet —a crypto wallet—we have to go outside and we have to have the resources and the foreign exchange to go outside to get into the system. We should be considering that, especially since we already have crypto wallet developers in T&T who cannot use their products in T&T. Thankfully with the Internet they can go outside which speaks to the point of infrastructure.”
Tewarie emphasised that such support systems will push this country in the right direction by ensuring the right cables and connectivity are in place.
“We now need to look at our digital infrastructure. It’s something we just need to do,” he urged.
In terms of tradeability, Tewarie pointed out: “Right now the TT dollar is not very tradeable and if we have crypto it’s more tradeable internationally.
“We can’t use it to pay for services and goods in small ways but it’s much more tradeable. How do we as quickly as possible get the regulatory environment that will allow us to do it?”
Additionally, he noted, blockchain technology has the power to improve government services and reduce corruption in the public sector.
“If we use the blockchain technology to do loaded cards much like visa cards that are locked to specific vendors it can reduce corruption.
“Think of that in the context of contracts for public works and verification. There will not be delays in payments and also ensure there are no inflated payments for work not done. The application potential is huge in the public sector as well as in the private sector,” Tewarie explained.
A measured approach
Arvinder Bharath, senior manager, financial technology and information security at the Central Bank, said cryptocurrencies and blockchains are getting a great deal of attention because they have the ability to change and create transformation. However, this in itself poses risks.
“The Central Bank is taking a measured approach. We need to find the balance between risks and rewards,” she said.
“We are examining the technology very carefully and its application in financial services. We are engaging with our peers regionally and internationally and are closely working with the Bank of England, the Bank of Canada and with other banks who are actively experimenting with this technology. We will work closely with them to do our own experiments over time.”
Technology enhances convenience but currently cryptocurrencies and blockchain are fragmented, making it somewhat onerous to establish policy across the board, Bharath explained.
“There are many different forms of this technology out there and until those standards are established we cannot set policy, issue guidelines or build protocols.
“You therefore also cannot train people to develop skillsets to develop these things in all of the variance of the technology,” she noted.
At the same time it also threatens resilience as anything that has the ability to transform also has the ability to destroy or at least threaten, she added.
“As our exposure to technology grows, the risks of those technologies also grow in the same kind of proportion… sometimes by a magnitude.
“There are many areas of risks to consider top amongst those is cyber risk because these technologies are not in a room anywhere. They cannot be controlled by walls, they are out there in cyber space,” Bharath said.
She noted that the World Economic Forum 2018 highlighted cyber attacks and data fraud or data theft as two of the top five risks.
“This is not going to get better as we adopt technology more deeply and become more and more reliant on it. We need to be managing the risks that are associated with it,” she advised.
Bharath said such discussions must be a shared responsibility as no one in authority can manage it on its own. Technology is based on infrastructure of utilities like telecoms, cables and wireless.
“All of the utilities that actually support our normal data centres need to support these at the national level, at the global level.
“Our ability to connect even to the Cloud is as good as the infrastructure within the country. If it is that our wireless goes down, as good as the Cloud infrastructure might be we will not be able to connect to it,” she said.
Next month the Central Bank will be hosting a closed conference on Fintec among central bankers in collaboration with international agencies. Discussions will focus on concerns, lessons learnt and opportunities.
Fintech is any technology that impacts financial services and systems. It encompasses an array of technologies, including Cloud computing, mobile wallets, electronic payments, big data, artificial intelligence, cryptocurrencies, and distributed ledgers.
Another conference on Fintec in the cyber area is carded for January next year.
Will Cornelissen, Deloitte Partner, Canada, said blockchain has the ability to enhance small island states by breaking down barriers and making systems more accessible, ultimately enabling such countries to achieve greater independence.
“If we had a blockchain entrepreneur in T&T they will be espousing the view that blockchain is a technology that unlocks the potential to democratise a number of systems.
“So the small player has equal access to systems that were previously inaccessible to. Blockchain can assist small countries to move way from mandates from larger countries,” Cornelissen said.
Echoing similar sentiments, BATT president Nigel Baptiste said there is need for self education.
“There’s no reason why we can’t be a leader. I think we are fooling ourselves if we are waiting on someone to educate us in this area. The regulators will play a role but information is widely distributed and available for everyone via the Internet. So nobody really has an excuse,” he said.
One of the advantages for T&T, Baptiste said because of this country’s small stature, it has less to lose compared to larger territories and bigger financial institutions when it comes to bringing disruptive technology into play.
“I’m hopeful that in T&T we will see this as an opportunity. It could be an avenue for us to become a much more active player in this concept of being the international financial centre if we really are to make a dent in that,” he said.
“We have to try newer technologies because everybody is out there doing everything that we are doing at a much bigger scale so we have to be willing to try something that others are not but obviously doing it with the right framework in place.”
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