Central Bank governor tells JSC: Benefits in fintech

CENTRAL Bank Governor Dr Alvin Hilaire said Trinidad and Tobago could benefit from the development and use of financial technology or fintech. He also said there needed to be greater public education about what fintech is and the benefits to be gained from it.

He made these comments during a virtual meeting with members of the Finance and Legal Affairs joint select committee (JSC) on Friday. Opposition Senator Jayanti Lutchmedial asked what fintech was. Health Minister Terrence Deyalsingh asked if it was a concept that was understood by "the man in the maxi."

Hilaire replied, "It (fintech) is really difficult to narrow down because it is really a continuum of issues."

At its most basic level, Hilaire said fintech makes "financial transactions much easier to effect."

He added, "In other words, you can move money from one place to the next." This could either be done between individuals, businesses or between government agencies.

"Financial technology allows rapid movement of funds. This is the key characteristic I would to say."

Hilaire said the Central Bank examines two aspects of fintech.

"One, they intend to involve companies that we do not regulate. So have to learn about that. Insurance companies, pension funds and commercial banks were identified as examples of this.

"Two, they are involved in financial engineering that is rapid and we have to try to understand."

On the bank's regulatory approach to fintech, Hilaire said, "We are focused on two things."

The first is enabling an environment that allows fintech to be fostered.

"It is quite important for people to be able to use technology that is affordable, available, understood and that is pervasive." Hilaire added that protection must be provided for people who use fintech."

"So our role is to help to provide an enabling framework but a base of supervision that is not constricting. But allows activity to be conducted in a safe manner."

Hilaire added the bank does this work in collaboration with other entities such as the Financial Intelligence Unit (FIU) and the Securities and Exchange Commission (SEC).

He said many ordinary citizens see fintech as an abstract concept because they do not see how it directly affects them. He cited the recent case of 1,836 social welfare cheques being stolen from a post office as an example of something which immediately catches the public's attention.

"The point I'm making is that it when something is relevant to people that they would understand. I believe that education is important."

Hilaire said the bank financial literacy programme is one way it educates the public about fintech.

He also said the introduction of fintech could see commercial banks improving their efficiencies. Banks could either incorporate fintech into their operations or partner with fintech companies.

Responding to a question from Public Utilities Minister Marvin Gonzales, Hilaire said the use of fintech could benefit state enterprises and the public service. He cited Ghana, Kenya and Myanmar among countries that embraced fintech in government services during the covid19 pandemic.

Finance Ministry permanent secretary Suzette Taylor Lee Chee identified the Licensing Division and the Registrar General's office amongst the entities which are seeking to digitise certain aspects of their operations.

She also said the ministry is working with the Andean Development Bank to develop as system which could see all taxes in TT being paid digitally.