By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The number of commercial bank branches in The Bahamas has declined by almost 30 percent over the past seven years, the Central Bank’s governor revealed yesterday.

Data unveiled by John Rolle as part of his Abaco Business Outlook conference presentation showed the scale of the commercial banking industry’s retreat from physical presence operations, with branch numbers declining from 86 in 2014 (and 88 in 2008) to just 61 presently - a reduction of some 25 locations.

The decline was more pronounced in Grand Bahama and the Family Islands, where there was an-almost 40 percent fall-off in bank branch locations from 38 in 2014 to 23 at the current time. As for New Providence, bank locations dropped by just over 20 percent or ten over the same period to reach 38.

Mr Rolle declined to go into details on the reasons for the branch network shrinkage, although it has largely been driven by the commercial banks - especially those that are Canadian-owned - seeking to exit unprofitable, costly island markets that they deem too expensive to maintain amid the push for Bahamians to increasingly use digital banking channels.

“What we do know when we look at what is happening throughout The Bahamas is that the branch footprint of banks has been shrinking,” he said. “There are many reasons for that that we’re not going into today.” The Governor also did not mention the controversy surrounding Royal Bank of Canada’s (RBC) decision to slash interest rates on savings accounts and term deposits to zero.

Instead, Mr Rolle said both himself and the Central Bank are focused on eliminating the “digital divide” or “uneven access” that Bahamians enjoy to digital financial services and products. He noted that, parallel with the reduction in physical branch locations, the number of automated banking machine (ABM) sites had risen by 91 percent in just over a decade.

ABM sites had increased from 200 in 2010 to 382 this year, although the expansion has largely been concentrated in New Providence where most persons live. Mr Rolle described access to financial services, whether via a bank, credit union or the new wave of digital providers, as “relatively high” with 94.3 percent of adults having access to a deposit account.

“The challenges we have have more to do with unevenness of access,” he added, pointing to conference attendees who had revealed individuals and businesses living on Abaco’s cays have to spend a day commuting to Marsh Harbour if they have to physically visit their bank.

“That should not be the case,” Mr Rolle added. “Even having a bank on the island, and having to plan to go to the bank, is a problem.” The Central Bank’s 2020 payments services survey showed that 25.8 percent of Bahamians are “highly likely” to use less cash in the future, with a further 31.5 percent also “less likely” to use it for transaction payments.

And, while cheque use has become “very diminished”, Mr Rolle added that digital financial services are not necessarily a panacea or cure-all for all The Bahamas’ financial access woes and bringing more of the unbanked/under-banked into the formal system.

For starters, he said The Bahamas’ relatively small population size made it difficult to acquire economies of scale. “We need to focus on how digital infrastructure can allow us to address some of the inefficiencies in the system and provide a way to more connect providers with users,” Mr Rolle said.

“This is a very small country. Let’s not kid ourselves about it; 400,000 people or whatever number you want to use.” As a result, there would still need to be “push back” on any inefficiencies that arise, although those that arise on the credit side can be dealt with via the credit bureau that is under development.

Mr Rolle added that the Central Bank will also have to enhance consumer financial protection to prevent the emergence of any “digital divide” as financial services becomes increasingly digitised. “We now have a financial ombudsman who is growing into the role,” he said, although no name or further details were provided.

“Another sensitive issue in The Bahamas is how we deal with politically exposed persons (PEPS) on the domestic side,” Mr Rolle added, indicating that the Central Bank wanted to “simplify” the level of scrutiny applied without undermining the financial system’s integrity.

“These are casualties of the correspondent banking de-risking process. While we accept that in The Bahamas, there needs to be some simplification without sacrificing the financial integrity we’re striving for and monitoring of transactions.”

The Central Bank governor said the regulator was pushing the Government to advance free wi-fi hot spots and data access as a means to encourage more Bahamians to adopt electronic payments. And he added that this needed to extend beyond large merchants to ‘Mom and Pop’ stores, as well as residents of inner-city areas in New Providence and Grand Bahama.

“I don’t think there’s a belief anywhere in the world that paper cash will completely disappear,” Mr Rolle said. “Our main focus is making sure 100 percent of the people in The Bahamas have hassle free access to make mobile or digital payments.

“We want to make sure no individual in The Bahamas, and I didn’t say citizen of The Bahamas, but no individual is prevented from access to making payments digitally. That will be the paramount goal.”