Factors Affecting the Adoption of Internet Banking within Barbados
Table of Contents
Introduction
Literature Survey
Caricom
ICT Policies
Internet Banking Initiates in Barbados
Telecom
WiMAX
Global Crossing
Barbados Internet Banking in 2009
Research Objectives
Research Design: Methodology
Contribution of the Study
Bibliography 3
Introduction
During November, 2002 the Central Bank of Barbados announced that it would be working to develop guidelines for electronic banking. One of the missions of this bank is to encourage an economic and financial environment which fosters growth of the economy. The bank began working on developing these guidelines in 2001. The development of appropriate general guidelines was viewed as essential. However, the bank judged that the jurisdiction was not ready for introduction of Internet banking in 2002. It was felt that both the public and private sectors would benefit from further education on how to use the Internet banking services which could be provided. Internet banking is now a reality in Barbados and of this paper will explore the factors which enabled this transition.
Literature Survey
Caricom
During October of 2004 governments who were members of Caricom sent representatives to Barbados. The purpose of the meeting was to discuss ICT policies and programs, which would increase research and innovation, allow capacity building, and ensure more support for publicly funded ICT programs. These ICT policies determine if the environment is conducive to Internet banking in Barbados.
Caricom consists of 15 Caribbean nations who are organized together to encourage economic integration, cooperation and coordination (Caricom, 2009). The group became official on August 1, 1973 when Jamaica, Barbados, Guyana, Trinidad and Tobago signed the Treaty of Chaguaramas (Caricom Law, 2006). The major purpose of this organization is to develop and institute projects for the less developed countries which are within its jurisdiction. The group works as the Caricom Single Market. The headquarters for Caricom is in Georgetown, Guyana. The 15 members of Caricom are Antigua and Barbuda, Barbados, Bahamas, Belize, Guyana, Grenada, Dominica, Montserrat, Jamaica, Haiti, St. Vincent and the Grenadines, St. Lucia, St. Kitts and Nevis, Trinidad and Tobago, and Suriname.
ICT Policies
ICT policies cover the Internet, telecommunications and broadcasting of radio and television (The Association for Progressive Communication, 2007). These policies can be conceptualized as being comprised of industry sectors, which include technology, media, and telecommunications. In a 2004 budget speech, the Prime Minister of Barbados, Owen Arthur (Prime Minister, 2009), announced that the country needed to modernize its e-government program. The program needed to be streamlined so that there could be an increase in employee productivity and better interaction with the public providing services 24 hours a day. Policies and programs were quickly put into place, which allowed rapid development of Internet infrastructure, which would be necessary for e-business such as Internet banking.
Internet Banking Initiates in Barbados
First Caribbean International Bank announced in January of 2005 that it would be the first bank in Caricom to offer Internet and telephone banking services. First Caribbean International Bank has assets of over $10.9 billion and a market capitalization of $2.5 billion (First Caribbean International Bank, 2009). The bank operates in 26 Caribbean islands including the Cayman Islands, British Virgin Islands, the Bahamas, Barbados, Belize, St. Lucia, Granada, Jamaica, St. Vincent and the Grenadines, and the Cayman Islands. In order to allow proper wire transfers over the Internet, the bank invested $50 million in a state-of-the-art technology platform.
Telecom
During October 2001 the Barbados government began to increase the liberalization of the telecom market. Previously, Cable & Wireless had an exclusive license on Barbados. This was replaced by nonexclusive license in 2001. The liberalizing of the telecom sector was done in 3 phases. The final phase was achieved in 2005.
The new environment for telecom allowed TeleBarbados to introduce a new high-speed telecommunication service in 2006. TeleBarbados spent approximately $70 million on a submarine cable system which allowed them complete independence from Cable & Wireless. This cable allowed for fixed wireless Internet and international data services. Both services are essential for Internet banking in Barbados. The 20 Gb submarine fiber-optic cable runs for 940 kms and will allow residential high-speed Internet access to both corporate and residential customers.
WiMAX
WiMAX means Worldwide Interoperability for Microwave Access and is used for telecommunications. The technology allows wireless transmission of data and a fully mobile Internet access. The technology is able to transfer up to 10 Mb/s of information. This speed of data transmission makes WiMAX a viable alternative to DSL and cable Internet access. WiMAX technology is especially important to rural areas in developed countries and many areas in developing countries. Traditional Internet connections provided by telephone lines or cables can be cost prohibitive to establish in areas where the population is sparse. Even in areas where there is a large population, the cost of laying enough line to provide Internet services for everyone can be cost prohibitive. WiMAX offers an alternative which is less expensive.
WiMAX is quickly becoming the standard in the industry for point-to- multipoint wireless Internet access. WiMAX complies with the IEEE 802.16 standard which determines the radio-frequency allowed in metropolitan areas. The WiMAX technology is an open source and allows for standardization of equipment between companies. This further reduces the cost of the technology. WiMAX is relatively easy to use in practice. The carrier mounts a rooftop transceiver as a base station which is connected to the Internet. This base station then uses WiMAX technology to transmit data to the subscriber's antenna. This technology is flexible in its use due to the range of up to 31 miles. This extended range is due to the WiMAX system being allowed to transmit at high power rates and use directional antennas to focus signals.
Fidelity Wireless began offering WiMAX-based wireless broadband Internet connections throughout Barbados in 2007. The company also began offering a triple service consisting of phone, Internet and video for its subscribers. Fidelity's regional headquarters is located in Barbados in order to provide office support and a network operations center. The Barbados WiMAX wireless Internet was the first of its kind in the Caribbean.
Global Crossing
Global Crossing is an IP solution provider (Global Crossing, 2009) who in February of 2007 announced it would be working with the Global Caribbean Network to lay a subsea cable operator with headquarters in Guadeloupe, French West Indies. This cable operator will enhance the global IP connectivity throughout the Caribbean region. The Global Caribbean Network has several agreements under which it can connect to data services, which arrive at Global Crossing's IP network in St. Croix. Global Crossing's 10 Gb wavelengths will allow Global Caribbean Network to connect with customers to Internet services within North America, Europe and Asia. This type of Internet connectivity is necessary for the full development of Internet banking in Barbados. Commercial banking over the Internet often requires international wire transfers, which must have stable Internet connections with global reach.
Barbados Internet Banking in 2009
There are now 54 offshore banks and 6 commercial banks operating in Barbados. There are also 14 licensed Trusts, finance and merchant banks within Barbados. All of these institutions allow Internet banking. The large commercial and offshore banks which are operating in Barbados are: First Caribbean International Bank, Dancap Bank, Bayshore Bank & Trust, CIBC Trust Company, First Horizon Bank Ltd., DGM Bank & Trust, London Life Bank & Trust Corp., Royal Bank of Canada, Whitten Bank and Trust Company Limited, and Scotiabank.
Research Objectives
This paper is a descriptive analysis of the factors affecting the adoption of Internet banking within Barbados.
Research Design: Methodology
This research is a literature review of the factors which allow the adoption of Internet banking within Barbados.
Contribution of the Study
This study can be used as an analysis of the necessary infrastructure required for Internet banking to be established in a developing country.
Bibliography
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Clark, E. (2009), Offshore banking Barbados, license, international financial center, multiple-currency banking products, offshore credit cards, loans.
Caricom (2009), Caribbean Community (caricom) Secretariat-home.
The Association for Progressive Communication (2007), APC-ICT Policy Handbook.
Caricom Law (2006), Treaty establishing the Caribbean community.
Prime Minister (2009), Prime Minister, the retired honorable Owen Seymour Arthur.
Central Bank of Barbados (2007), Central Bank of Barbados.
First Caribbean International Bank (2009), First Caribbean International Bank.
TeleBarbados (2009), TeleBarbados, Inc.
Vaughan-nichols, S.J. (2004), "Achieving wireless broadband with WiMAX",Computer, June, pp. 10-13.
Andrews, J. G., Ghosh, A. & Muhamed, R.(2007), Fundamentals of WiMAX: understanding broadband wireless networking, Prentice-Hall, Upper Saddle River, NJ.
Fidelity Wireless (2009), Fidelity wireless broadband.
Global Crossing.