The Caribbean is a region comprised of 26+ countries with a total population of 40 million inhabitants. In the region one can find several different languages and dialects, vast variety of races, governments systems and economic activities. It’s a diverse and fragmented region that contains several untapped opportunities in a variety of economic sectors. Each of the Caribbean countries are going through major transformations in specific segments and economic activities, but when it comes to innovation in the financial sector, we have seen unprecedented changes happening in the last few years. 

We have the major markets- Dominican Republic, Jamaica, Trinidad and Tobago, and Puerto Rico, which are leading the way when it comes to innovation in the financial sector and are shaping the fintech ecosystem in the region. However, we have several other smaller markets that are also making huge progress when it comes to the financial services and are strongly pushing the innovation envelope to tackle and position themselves as pioneers in the fintech ecosystem in the Caribbean. 

The Caribbean has become an attractive region when it comes to economic activity, and it’s indeed an extremely attractive territory for financial technology startups. However, the majority of the countries in the Caribbean do not provide a well-established ecosystem for fintech startups to start and successfully expand. Thus is mainly due to the lack of an established regulatory framework. Today when we look at the transformation that some Latin American countries are going through on regards to financial services, we have identified these transformations only happen when the regulator steps in and takes action on framing “the rules of the game” for fintechs.

The fintech startup ecosystem in the Caribbean is evolving quite fast and the reality is that today there are a couple of fintech startups, such as digital wallet providers, digital asset companies, self-serve payment kiosk, etc. However, we won’t be able to really see a complete transformation and burst of the sector until we have the government and regulators of the markets taking action on this. We have identified that the government of countries like Bahamas, Cayman Islands, Barbados among others, have taken some initial steps toward pushing innovation when it comes to financial services and fintech, here a few examples: 

• Bahamian Payments System Modernization Initiative (Bahamas)  “The initiative targets to improve outcomes for financial inclusion and access, making the domestic payments system more efficient and non-discriminatory in access to financial services” Some of the initiatives the Central Bank has launched are the Sand Dollar project, which is the first digital version of the Bahamian dollar, as well as developed of the regulatory framework for Providers of Electronic Retail Payment Instruments and Electronic Money Products. 
  

• The Virtual Asset Service Provider Law (Cayman Islands) the initiative focuses on developing a framework and standards for services providers of virtual assets. It also focuses on meeting international regulation standards on the managing of virtual assets, as well as to protect consumers when dealing with digital assets or crypto service providers. 
  

•  ECCB Digital EC Currency (Eastern Caribbean) the pilot of the initiative mainly focuses on issuing a digital version of the EC Dollar (currency of the Easter Caribbean Region).  The objective of the initiative is to promote financial inclusion, economic growth, resilience, and competitive for the Eastern Caribbean countries. The digital currency could be distributed by licensed bank and non-bank financial institutions and to be used between consumers, merchants and government all through digital platforms.  

• Barbados Regulatory Sandbox the initiative allows financial service providers to test and innovate financial solutions in live monitored environment allowing service provider to identify the viability of the products and solutions prior to be released. This sandbox will eventually help the regulator to frame the fintech regulation of the country. 
  

The reality is that when regions like the Caribbean are put together, it represents a big market in terms of the number of potential customers. However, each island is an independent country so having the right technology infrastructure and established regulation are key components for fintech startup to enable them to be used across several markets from one single location. The Caribbean is still a “virgin” territory when it comes to the fintech world and we will definitely continue to see a huge growth and transformation as we see more and more initiatives coming from the local regulators in several markets. It is key for fintech startups to stay close and monitoring local regulators progress as they release updates on regulatory frameworks and have first mover advantage.