Financial inclusion and digital currency
The tedious and time-consuming process of opening a traditional bank account has been one of the most common problems in the Jamaican financial system for many years.
Before opening bank accounts or doing business with financial institutions, institutions are required to collect certain customer information to verify their identity 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 used to facilitate money laundering or other financial crimes. The requirements are called “Know Your Customer” or KYC.
Although necessary, KYC often leads to the exclusion of certain segments of society from the formal banking system, as individuals may not be able to provide all the documents required by institutions.
These sometimes strict requirements partly explain why many Jamaicans remain unbanked or underbanked. Unbanked people refer to people who do not have access to the services of a bank or similar financial institution. In contrast, the underbanked refers to people who have a bank account but who rely primarily on informal financial services to meet their needs.
Many problems can arise from being un/underbanked. One of the most pressing issues is security. If a person does not have a bank account, they might resort to keeping that money at home, which poses many safety and security risks. Additionally, there is no way to track a person’s financial history without a valid bank account, which could prove problematic when applying for a loan, scholarship, or financial aid.
Advances in financial technology such as digital wallets have increased financial inclusion. They have helped more people join the formal banking system by removing barriers that would prevent them from participating in the financial sector. Digital wallets allow users to easily create accounts and access a digital platform that provides financial services. A digital wallet is like a regular wallet that stores cash, IDs, and cards, but only in digital form.
Lynk, Jamaica’s latest digital wallet, only requires users to upload a government-issued photo ID (driver’s license, voter’s card, or passport) and a copy of their tax registration number ( TRN) to create an account. The app also collects biometric data to prevent unauthorized access to your money for added security. Lynk’s streamlined process opens up access to all Jamaicans 18 and older to a secure place to store 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 has no minimum opening balance requirement. Customers can create accounts with zero dollars and get a special welcome bonus of $250.00 when they claim a refer-a-friend code or a LYNKNOW250 in the Rewards section of the app. The app provides un/underbanked people with a formal record of their spending habits to use to start the process of accessing more traditional financial services such as loans. Additionally, in the coming weeks, customers will have the option to fund or withdraw from the wallet via the NCB ABM network – also free of charge.
Lynk is currently the only digital wallet approved by the Central Bank of Jamaica (CBDC). Once Jamaica launches its CBDC, JAM-DEX, customers will need to download the Lynk app to gain access to the currency. Financial inclusion is an ongoing process, but advancements such as digital wallets have revolutionized banking and allowed more people to access the benefits of being part of the formal economy.