I don’t think I can recall one time that I saw my grandmother using an ATM. I am, however, certain that she had a debit card some years before she passed. Many in her generation feared the ATM. Quite a few called it demonic, a semblance of the Mark of the Beast. Another part of our society resented it because of a lack of knowledge of, and trust in, the technology. Ma would wait in line for hours just to complete a simple balance check as recently as 18 years ago. Most of us could have checked our balances at that time. Frustrating as it was, my experiences being her chaperone on those days proved invaluable. I understood from early that gaining trust is perhaps the most difficult task when introducing technology into financial systems.
Ma wanted to be able to read the teller’s body language. She figured that she could better deduce any foul play by comparing what they were seeing with what her own records indicated. Interestingly, I don’t believe that I know anyone who takes on that responsibility nowadays unless they employ, or work as, an accountant. The majority of us have now grown comfortable with what the bank says our balances should be. Moreover, that trust has deepened, and our primary source of this information now comes through screens. I must commend CIBC, and its previous incarnations, for being a leader in driving that behaviour.
Presently, most Barbadians access their balances and transact through apps and cards. I wish for all to note, though, that the decision by regional financial institutions to move in this direction was not based on customer convenience alone. People lost junior banking roles. These technologies also allow institutions to contain expenses over the long run in a way that labour cannot. Profitability and productivity are meant to increase. In economics, we call this increasing returns to scale. The implementation costs are substantial and upfront. In many cases, the breakeven point takes between five and ten years in Barbados. The greatest initial benefit to an economy, however, is the growing ease of transactions.
Evidence from modern economies continues to suggest a hand-in-hand relationship here. Economies tend to grow faster when transaction costs fall. Over time, this leads to more economic activity, more consumption, and more investment. If the local financial system had continued to disregard financial technological advancement, our economy would have suffered more severely, and for far longer, than what we witnessed during the COVID-19 pandemic and the “Lost Decade”. Customers of the financial system, therefore, reap most of this reward from the onset, or at least they are supposed to. There are, of course, significant risks too, but more on that by this article’s close.
The Financial Stability Report (2018), produced by the Central Bank of Barbados, noted that 55 per cent of all domestic payments were then handled by transactional platforms such as CARIFS, the local automated clearing house, and the Real Time Gross Settlement System (RTGS). While these systems remain in existence, the Barbados Automated Clearing House Services Incorporated (BACHSI) is the primary underlying system that facilitates the direct payment of salaries into bank accounts on the island, along with the payment of various bills. The RTGS handles larger one-time payments, typically between financial institutions rather than from them to any single person. Both systems are owned by the Central Bank of Barbados to varying degrees.
Payments are also facilitated through separate networks managed by Visa and Mastercard. This is similar to the global networks they operate for people who use their cards through financial institutions. There is still some interoperability amongst all of the aforementioned systems. BimPay, as I understand it, will seek to combine the functions of BACHSI and RTGS. In other words, those services will migrate into BimPay. The underlying architecture may change in form, but the essential components are expected to remain much the same. Most payments made to individuals by financial institutions are currently handled through BACHSI. In fact, according to the commercial bank clearing records published by the central bank, the total annual value of these transactions grew, on average, by 4.9 per cent per year since 1992, reaching an approximate $7.5 billion in 2025. By some measure, close to half of our economic activity was linked to these sorts of digital transactions. The long-term average growth rate closely mirrors that of the economy since the 1990s. Notably, the only annual declines in total transaction values occurred during economic recessions.
BimPay intends to be familiar yet progressive. The Central Bank of Barbados is attempting to improve island-wide financial accessibility by modernising the integration of financial technology within an already existing monetary framework. I support the notion of BimPay because the central bank has prioritised necessary advancements, the sort that I find admirable in other jurisdictions. I have used the likes of Zelle in the USA and Pix in Brazil. Zelle is a third-party digital instant payment processing service that runs on top of FedNow. FedNow and Pix are central bank-led and maintained systems developed to reduce frictions in the financial sector while boosting economic enfranchisement. Both encourage the development of third-party services on top. Pix especially allows almost anyone access to instant payments through a standalone app.
The Central Bank of Barbados has, in my strong opinion, taken to promoting the BimPay app as a priority. This continues to be a mistake. Barbadians still believe that BimPay is entirely a competing service to other first movers in the market, such as FirstPay or mMoney. Recall what I wrote earlier: BimPay will replace the core functions of RTGS and BACHSI. It will therefore process all of our transactions not involving Visa and Mastercard, regardless of which local app or service is used.
The app, then, must be viewed as a new market entrant running on top of that architecture. Since the BimPay app appears likely to be free for all payments and transfers other than those between businesses, other current and future services may be hesitant to charge fees much above what the central bank itself charges. I do wonder what the return on investment will be for them.
Now comes the downside. In Brazil, one can deposit money into a Pix account through merchants such as newspaper stands. I recall that this was part of the value proposition of mMoney. You cannot, however, do this with the BimPay app. It requires that you open an account with a financial institution of your choice through the app itself. The hope is that all commercial banks and credit unions will ready their internal systems to facilitate this by 12 June. That feature introduces obvious friction. There is serious potential for financial institutions to frustrate prospective users by pushing them into traditional onboarding or by making it difficult to sign up through BimPay. In my opinion, there is little that the Central Bank of Barbados can currently do to enforce service-level agreements if onboarding systems fail because of problems tied to the quality of the electricity grid.
Additional concerns revolve around the central bank’s approach to business continuity planning. While I admire and support its use of cloud technologies, I still worry about data sovereignty and integrity when offshore services are used, even for redundancy. In any case, what the bank is doing is important, especially in the event of a natural disaster. My largest worry, however, involves the lack of enabling, but extensively punitive, data privacy legislation. I will admit that the old system worked sufficiently well without such legislation. BimPay’s tech stack is modern and, in my opinion, requires stronger legal data privacy provisions.