Barbados boasts a sterling reputation as a destination of choice for international financial services and global business, providing innovative products to a sophisticated and demanding clientele. As a forward-looking jurisdiction, Barbados has set its sights on transitioning into a global FinTech hub of choice not just in the Caribbean, but to be ‘best in class’ worldwide. Barbados has all the essential base ingredients for becoming such a hub.
What Is A FinTech Hub?
FinTech is a multibillion-dollar industry which has been revolutionising the global economy through digital lending and credit, cryptocurrencies, mobile payments, crowdfunding and other disruptive technologies. They are disruptive technologies in that they change traditional ways of doing business, including traditional financial services. FinTech technology adoption rates are highest in China, India, Russia, South Africa and Colombia, according to EY’s FinTech Adoption Index 2019.[i] COVID-19-influenced demand for electronic and digital solutions has caused an explosion in an already growing number of FinTech start-ups and investment activity. According to BCG data cited by Milan FinTech Summit’s website, “(the) number of fintech startups worldwide tripled in the last two years, rising from over 12,200 in 2019 to 26,000 in 2021”.[ii]
Allured by the benefits attracting such FinTech startups could bode for their economies, many cities and a growing number of small international financial centres (IFCs) have established or are seeking to establish FinTech hubs. A FinTech hub is “the focal point for FinTech activity within a region or a network. It is the ecosystem encompassing the entire infrastructure, organisations and people within the hub, as well as how those elements are organised and engage with each other” (Deloitte 2017)[iii]. San Francisco, London and Singapore are among the top FinTech hubs globally.
The Government of Barbados (GOB) has recognised the benefits of promoting FinTech entrepreneurship among its population and encouraging investment in this growing space, especially for its post-COVID-19 economic recovery. These benefits include not just macroeconomic benefits such as foreign exchange and employment generation, foreign direct investment (FDI) flows and export diversification, but also the benefits FinTech offers to promote financial inclusion and access to finance for small and medium sized enterprises (SMEs) and individuals through faster, more convenient and simplified payment and fundraising platforms.
In her presentation at the Singapore FinTech Festival in 2020, Barbados’ Prime Minister Mia Amor Mottley outlined some of the ways her government is prioritising digital government opportunities and building a tech-savvy society.[iv] Even before COVID-19, Barbados had been undergoing a period of digitalisation which has accelerated since the pandemic. Barbadians are now able to apply and pay for a larger amount of government services online from the comfort of their homes and without standing in lines. Plans include a project to digitise all government records, to introduce a new digital ID card and a new science and technology park.
Barbados has also announced its intention to become the first sovereign nation to have an embassy in the metaverse. Barbados has also sought to leverage its growing relationship with the United Arab Emirates (UAE) and Kenya, as UAE is known for its Dubai FinFech hub and Kenya for its M-Pesa. Indeed, the theme of Barbados’ Pavilion at the just concluded Dubai Expo 2020 was ‘Innovation and Transformation…from sugarcane to blockchain’, signalling Barbados’ intention to become a major player in this space.[v]
Barbados Has All The Ingredients
The race is on among jurisdictions to become the next big global FinTech hub. According to Deloitte, four essential ingredients are needed for a FinTech hub to thrive: “the strength of a FinTech hub is directly related to the ability of FinTech organisations to access talent, capital and demand, as well as the effectiveness of progressive policies and regulations designed to enable FinTech growth”.[vi] Barbados is increasingly ticking these boxes.
Access To Talent
A successful FinTech hub must be able to attract, develop and retain talent in three main domains: finance, technology and entrepreneurship. Barbados has a highly educated population and workforce, as well as a cadre of professionals in the legal, financial and technical fields. The Ministry of Information, Science and Technology (MIST) has committed to retraining workers and ensuring the population has the skills to compete effectively in a world where disruptive technologies are increasingly pervasive. Barbados-based company BITT Inc has established itself as a major player in the blockchain space, providing technical support to central banks to establish digital versions of their currencies.
Access To Capital
Barbados is home to four major banks, all of which are foreign-owned and three are Canadian. Venture capital is not yet a major source of funding in Barbados but there is a small network of angel investors and a growing community of investors interested in investing in the FinTech space.
Demand for FinTech products is growing in Barbados and Barbadians are increasingly willing to try new and innovative financial services. There is also demand for ‘Brand Barbados’ as an IFC, which will be useful as it seeks to become a FinTech hub. Barbados is an attractive destination for business which is one of the reasons why its Welcome Stamp programme, introduced during the COVID-19 pandemic, was so successful that the Government has announced its extension. There is also the demand for the services of Barbadian firms. Barbadian FinTech company Bitt Inc. has been making waves by assisting countries in establishing digital versions of their fiat currencies. The Central Bank of Nigeria announced Bitt Inc. as a technical partner to help launch Nigeria’s digital currency, the eNaira.[vii]
Progressive Policies And Regulation
Strong laws on intellectual property, its well-regulated financial services sector, a reputation as a compliant jurisdiction and its tax treaty network have all served Barbados well as an IFC and will continue to do so as it transitions to FinTech. Barbados’ Financial Services Commission (FSC) and the Central Bank of Barbados operate a regulatory sandbox to allow live-testing of new and innovative financial products within a controlled setting.[viii] The first was the mMoney app which allows peer to peer transactions as well as digital payments facilitated by blockchain. Bitt Inc. became the first company to successfully exit the regulatory sandbox. The FSC has announced it will establish a Stakeholder Advisory Committee for the International Business Sector and a FinTech Advisory Committee proposed to help with developing Barbados as a FinTech and blockchain hub to ensure that Barbados encourages innovation and competition but without comprising consumer protection or financial stability.
Barbados has all the necessary base ingredients to become a ‘best in class’ FinTech hub of the future. As the saying goes, watch this space!
Alicia Nicholls, B.Sc.(Hons), M.Sc. (Dist.), LL.B. (Hons) is an international trade and development specialist with over a decade of experience working in, and writing on, trade and development matters of interest to the Caribbean. She holds a Bachelor of Science in Political Science (First Class Honours), a Bachelor of Laws (Upper Second Class Honours), and a Masters in International Trade Policy (with distinction) from the University of the West Indies, and an Associate Degree in French, Spanish and German for Business and Tourism from the Barbados Community College. She also holds the FITT Diploma in International Trade from the prestigious Canadian-based Forum for International Trade Training (FITT) and has been a FITT General Member since 2015. She is also a member of the Michigan-based Academy for International Business (AIB) since 2016. Alicia presents and writes on a wide gamut of trade and development issues for regional and international publications and industry magazines. Her research interests include international business, MSMEs, AML/CFT issues, investment law and policy and investment migration programmes. She is also the author of one of the Caribbean's leading trade and development blogs www.caribbeantradelaw.com. Alicia is currently part of the research team of the Shridath Ramphal Centre for International Trade Law, Policy & Services of The University of the West Indies, Cave Hill, the premier trade policy training, research and outreach institution in the Caribbean.