Four macro-critical factors have the potential to trigger a creative disruption in the financial sector in the Caribbean region in the not-too-distant future. These macro-critical factors are (i) risks from climatic changes and natural disasters; (ii) advance in financial technology; (iii) derisking activities by correspondent banks; and (iv) changing lifestyles and expectations of millennial customers. Financial institutions in the Caribbean must therefore effectively position themselves strategically and operationally to adequately respond to these macro-critical issues.
Banks and the financial sector overall must narrow any relevance deficits that may exist, and simultaneously chart new pathways and new visions and strategies. They must minimize potential threats posed by the macro-critical factors and capitalize on potential opportunities. Financial institutions need to have a clear sense of the posture they wish to adopt, as well as a coherent vision and realistic strategic plan to navigate the future landscape, which will be fundamentally dissimilar to what currently exists. Transforming that vision into reality will not be quick or easy. Nevertheless, it is a development imperative for the Caribbean. A summary of the issues and the potential implications for the financial sector throughout the region are outlined below:
Which Caribbean financial sector institutions are best prepared for the future described in this post? What have they done to prepare for and adjust to the future? Download our latest policy brief to find out!
About the author:
Dr. Allan Wright is currently the senior country economist for the Inter-American Development Bank’s Country Office in Nassau, The Bahamas. Prior to his IDB assignment, he was a senior economist at the Central Bank of Barbados, and he spent 2 years as a Researcher at the Center for Monetary Studies in Latin America (CEMLA). Dr. Wright is a skilled econometrician with extensive skills in macro-structural modeling and strong macroeconomic and quantitative reasoning skills. He has substantial knowledge of EVIEWS, MATLAB, DYNARE in running computable general equilibrium (CGE) models and has conducted capacity building and training in macroeconomic modeling.
Dr. Wright received his Ph.D in Economics from the University of the West Indies in 2011. Since receiving his doctoral degree, he has continued his ten-year involvement in the field of Economics and publishing articles in regional and international journals in the areas of public debt, fiscal sustainability, monetary and macroprudential policies. His research has been recognized with peer-reviewed publications. During the last year, he has authored various papers that have been accepted by the Econometric Society Meetings (in Asia, Europe, and Latin America), the Latin American Economic Association Annual Meeting, and the Latin American and the Caribbean Central Bank Research Network Annual Meeting.