The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Clearing Banks Association’s chairman yesterday explained the ‘basic bank account’ proposal is designed “to ensure no man is left behind” through reforms enacted in a “non-dictatorial” manner.

Gowon Bowe told Tribune Business that the product identified by John Rolle, the Central Bank governor, will not be for “the majority of depositors” and instead represents “targeted assistance” for persons with small savings and low levels of transaction activity who find themselves on the margins of the formal banking system.

Confirming that the ‘basic account’, which would have lower costs and more regulatory control over the fees charged, is part of a “wider conversation” surrounding bank fees and other related reforms, he reiterated that a “balance” needs to be struck between the sector’s profitability and sustainability.

“Part of that is to look at what is the objective of the policymakers, and if it is to protect the most vulnerable who may find it more difficult because they have less spend, they have less money, we can look at targeted assistance,” Mr Bowe told this newspaper.

He explained that the ‘basic bank account’, which was birthed in Europe, is a product that has since spread to the Dutch Caribbean and Barbados. Mr Bowe said the Central Bank and commercial banks are focused on solutions that boost financial inclusion in a “structured and rationale” way given the high cost, increased taxes operating environment that presently exists.

The Association chair added that the ‘basic savings account’ product’s market will likely include unskilled and semi-skilled workers, students and the elderly, and will likely represent less than 10 percent of the Bahamian population. These persons, too, will represent low anti-money laundering risks because they typically only transact in small sums.

“Banks want all parties to be in the system,” Mr Bowe told Tribune Business. “When you have a thriving underground or black economy that threatens the entire jurisdiction. When we talk about the unbanked, from our perspective that’s unskilled labour paid by cash and cheques, and who are finding it more difficult to cash cheques because they don’t have an account.

“The primary consideration is ensuring banking is available for all and inclusive, bearing in mind we are a for-profit enterprise. There has to be a balance between profitability and sustainability, but there are elements that can be accommodated to ensure no man is left behind.”

Confirming there is “no real objection” to the proposed ‘basic savings account’, and efforts to address government and consumer concerns, Mr Bowe added: “There certainly has to be a balance that probably relies better on education and communication as the cornerstone as opposed to the desire to legislate morality, if you will.

“Banks need to be sustainable, and they need to be sustainable for wider financial system benefits, but there are persons that need greater protection than others and there needs to be a level of transparency around fees. A lot of that exists but we have to do a better job of making sure it gets out.

“This is one plank of a wider conversation, not what’s bandied about in the community as legislation but how do we reform the sector to provide the protection for those most vulnerable and transparency to allow consumers to understand how fees are determined, and how they are managed and overseen by the regulator going forward,” Mr Bowe continued.

“Communication on the costs addressed by the fees, looking at communications on what was intended to be raised in revenues by the fees so consumer can determine the fairness. There are a number of elements that are being studied and considered as part of wider reforms for the sector that are collaborative and not dictatorial.”

Mr Rolle, in unveiling the ‘basic bank account’ idea, said an account with fixed costs has been successfully implemented in many European and Caribbean countries, explained: “A basic banking product would be an account that individuals have access to where there is more regulated control around the cost of that facility,” he explained.

“It would be a way of providing some pricing parameters within a defined range for what we call a basic banking or a transactional account. And that is the approach that has been, you know, developed in parts of Europe and many parts of the Caribbean.

“It’s happening now in many of the Dutch islands of the Caribbean. We have examples in terms of the approach, and we’re looking at how we can, you know, adopt those, or adapt those for the Bahamian case.”