Kurt Wilson | Jamaica banking sector is advanced
The Jamaica banking sector has grown 11.5 per cent since 2005, with the sector's progress centred largely on improvements to the regulatory environment, new product developments, pricing strategies and geographic expansion.
However, the sector was in a different position for much of the early 1990s, when its non-stop development contributed to the national economic imbalance and resulting crisis. Major names in the banking community have taken pains to ensure that growth this time around is sustainable.
Growth overall among deposit-taking institutions occurred at a slower pace, the Bank of Jamaica (BOJ) reports in its annual review of the sector, their combined asset base increased by 9.5 per cent or $103.2 billion to $1,194.1 billion, moderating from growth of 11.6 per cent or $113.0 billion during 2014.
The slower growth, the BOJ said, was due to the reduced impact of revaluation. Meanwhile, the central bank also reported that commercial banks improved their market share nearer to the 80 per cent mark in 2015, at the expense of other supervised deposit takers and also the credit union sector.
Compare to other Caribbean countries, Jamaica's banking sector is one of the most advanced in its implementation of the Basel core principles. Having expanded at a considerable rate over the past decade, financial services in Jamaica have done a great deal to stabilise the economy's more troubled areas. Nowhere else is the contribution more significant than in banking, where the landscape has undergone quite an extraordinary transformation and promises to pull lesser performers out of the mire.
As stated by Audrey Tugwell Henry, senior general manager of retail banking at National Commercial Bank Jamaica in the World Finance publication, "The transformation of Jamaica's banking sector hinged on improved risk management programmes and processes, enhanced understanding of customer behaviour, cutting-edge technologies, reorganisation of functions and business units across the sector, and improved products and services."
With this said, the way forward for the Jamaican banking structure is to continue with the further implementation of the Basel accord to lower the level of risk. Regulators and banks have fast-tracked the implementation of Basel III, which raises the levels of capital that banks around the world must hold as a safeguard against another financial crisis. Basel III itself is a comprehensive set of reform measures in banking prudential regulation, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector post-crisis.