Financial inclusion and digital currency
THE tedious and time-consuming process of opening a traditional bank account has been one of Jamaica’s financial system’s most common pain points for many years.
Before opening bank accounts or conducting any business with financial institutions, institutions are required to collect certain information on customers to verify their identities and the source and use of funds. The Bank of Jamaica (BOJ) requires this information to ensure that financial institutions meet international standards and are not being used to facilitate money laundering or other financial crimes. The requirements are called ‘Know Your Customer’ or KYC.
While necessary, KYC often leads to some segments of society being excluded from the formal banking system as individuals may not be able to provide all the required documentation that institutions require.
These, at times, stringent requirements are part of why many Jamaicans remain unbanked or underbanked. The unbanked refers to individuals that do not have access to the services of a bank or similar financial institution. In contrast, the underbanked refers to people with a bank account but mostly rely on informal financial services to meet their needs.
Many issues can arise from being un/ underbanked. One of the most pressing issues is security. If an individual doesn’t have a bank account, they could resort to keeping that money at home, which presents many safety and security risks. Additionally, there is no way to keep track of a person’s financial history without a valid bank account, which could prove problematic when applying for loans, scholarships, or financial aid.
Financial technology advancements like digital wallets have made progress in increasing financial inclusion. They have helped more people join the formal banking system by removing the barriers that would prevent them from participating in the financial sector. Digital wallets make it easy for users to create accounts and access a digital platform that provides financial services. A digital wallet is just like a regular wallet that stores money, ID and cards but just in a digital form.
Lynk, Jamaica’s latest digital wallet, only requires users to upload one Governmentissued photo ID (driver’s license, voter’s ID or passport) and a copy of their tax registration number (TRN) to create an account. The app also collects biometric data to prevent unauthorised access to your money for added security. Lynk’s simplified process unlocks for all Jamaicans 18 years and older access to a secure place to keep their money and the ability to accept and send free digital transactions instantly.
The Lynk app is also free to download on Android and IOS platforms and does not have a minimum opening balance requirement. Customers can create accounts with zero dollars and benefit from a special Welcome Bonus of $250.00 when they claim a friend’s referral code or an LYNKNOW250 in the Rewards section of the app. The app gives the un/underbanked a formal record of their spending habits to be used to start the process of accessing more traditional financial services such as loans. Also, in the coming weeks, customers will have the option of funding or withdrawing from the wallet via the NCB ABM network – also for free.
Lynk is currently Jamaica’s only central bank digital currency (CBDC) approved digital wallet. Once Jamaica launches its CBDC, JAM-DEX, customers will have to download the Lynk app to have access to the currency. Financial Inclusion is an ongoing process, but advancement like digital wallets have revolutionised the banking sector and has allowed more people to access the benefits of being a part of the formal economy.