Highlighting the many issues facing bank customers in The Bahamas, Minister of Foreign Affairs and the Public Service Fred Mitchell charged that a solution may be needed in the form of intervention by the legislature.
Over the past decade, foreign banks have systematically reduced their presence in The Bahamas and the wider region, consolidating or closing branches all together.
The trend was even highlighted in recent research conducted by US think tank the Atlantic Council, which found that there was a 41.3 percent decrease in correspondent banking relationships (CBR) in the Caribbean, with The Bahamas landing fifth on the list of nations most adversely impact.
The issue has even been raised before the US House Committee on Financial Services.
Addressing the issue in the House of Assembly on Monday, Mitchell lamented the lack of intervention by the banking sector's regulator, the Central Bank, and suggested the issue may be to a level now that the government must intervene.
"My constituents are agitated to no end about the lack of regulation of the banking sector in this country. We have over the past decade presided over the de-banking of communities from north to south in the country, we have presided over the depersonalization of services in the banking sector, we have presided over the increase in costs of services and the lessening of those services. We have complained and screamed and shouted to do whatever we can to reverse this trend, we've appealed to the regulator and nothing has changed that pattern," Mitchell said while contributing to debate on the Central Bank of The Bahamas (Amendment) Bill, 2023.
He continued, "The one that really seems to annoy Bahamians is when you dial on the phone you can't get anybody in the bank on the phone. The phone is being answered by someone somewhere else. Someone needs to be able to deal with this as an issue.
Mitchell continued, "One of the solutions to this problem might be that the legislature will have to intervene. I'm wondering now whether the answer to this is not to separate the regulatory functions from the monetary functions of the bank, and doing somethings like ensure there is Bahamian content in banking so that when a customer of a bank needs to find out something from the bank, they have a right to speak to someone in person. Not someone on the phone, but someone in person. And they have a right to speak to someone in person in The Bahamas, maybe that can be a statutory provision.
"Then maybe we look at capping the charges that can be brought for services that can be advanced, for what is after all a public good. Maybe the legislature can indicate that by statute. But what would be preferable I think is if the banking sector and the Central Bank got the message, and if the opposition [agrees], I think maybe that will be a useful thing to do."
The Central Bank and commercial banks have in recent years made a concerted effort to push consumers more toward digital banking, with banks eliminating many in-branch services to encourage online banking, and the Central Bank introducing a central bank digital currency (CBDC), available for use through digital wallets.
In December 2021, the Central Bank made a significant move toward digital transactions, announcing the elimination of Bahamian dollar checks by December 2024. It's a move Mitchell called into question from the House floor.
"I'm sorry to use this expression, but I consider it a fool's errand to be hiring a consultant for two years as I understand it, to convince us why we shouldn't be writing checks. Because I gather the next thing on the chopping blocks is checks, we are supposed to stop writing checks. The technology exists right now in the United States - my sister shows me how she does it - you get a check, you take your phone, take a picture, it goes to your bank, and instant money into your account," he said.
"Or you walk up to the ATM, insert the check, instant money into your account. So why would we be talking about we will stop writing checks, or we're going to ban the writing of checks? And then to hire a consultant over two years to teach us why we should not be writing checks, it doesn't make any sense to me. It costs now $10 to put your own money into the bank and the services just seem to deteriorate."
Earlier this year, Central Bank Governor John Rolle admitted that more work will be done to ensure local banks are able to settle digital transactions faster, before the Central Bank moves to completely eliminate checks.
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