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CEO of NCB Capital Markets Ltd Steven Gooden is challenging Jamaica’s policymakers and financial services industry to take advantage of the technological revolution being catalysed by the COVID-19 pandemic and create significant value for the island by developing a competitive advantage in the global market.

Gooden, who was addressing the 17^th Jamaica Stock Exchange Regional Investments and Capital Markets Conference, held at The Jamaica Pegasus hotel in New Kingston this week, warned that the country and financial services industry would risk missing out on the opportunities afforded by the Fourth Industrial Revolution – and potentially leave Jamaica stuck in a cycle of low GDP growth – if it does not disrupt the status quo.

LOSING MOMENTUM

“Since 2017, our local capital market has made significant advances. We have seen a raising of the bar in terms of transaction frequency and sizes. We have seen greater focus on more flexible financing arrangements. We have seen the emergence of new platforms; we have seen greater use of ratings by debt issuers as well as the implementation of important enabling regulatory changes,” said Gooden as he addressed the conference on Day One this past Tuesday.

“So, a lot has happened. However, upon reflecting, if we are to be honest with ourselves, we are losing momentum within the context of the opportunities ahead.

“We have the opportunity to not just have the capital markets be an enabler for growth in the private sector, we have the opportunity to bring the Caribbean together and, I dare say, ceate a niche in the global market place, ultimately transforming the lives of our citizenry.”

Taking a look at the local and regional markets, Gooden noted that for decades there has been consistent discussion around the establishment of a regional stock market and the need to mobilise capital across the region.

“With financial firms spreading their tentacles across the Caribbean, enabled by technology, we are seeing a coming together of the markets,” he said.

“We are seeing the creation of similar products and services, we are seeing a reemergence of cross listings – Guardian Holdings relisted on the JSE last year while the Massy Group will cross list its shares this week. And without a doubt technology has helped.

“However, while trending in the right direction, the path we are taking is not enough to avoid not being here in the next decade talking about the need for a regional market. Too many legacy legislation/regulations exist across the countries with each territory having its own currency nuisances.”

“If it is that we are to mobilise capital across the region and create for ourselves a world-class common regional market infrastructure, it requires a different approach.”

Steven Gooden, CEO of NCB Capital Markets Ltd

Gooden recalled an attempt in 2008 to create a regional market with the launch of the CXN, but lamented that, 14 years later, such a body has yet to come to fruition, with the current road to a truly regional market “filled with road blocks”.

Said Gooden: “If it is that we are to mobilise capital across the region and create for ourselves a world-class common regional market infrastructure, it requires a different approach. The region has been pioneering digital currencies. These developments have substantial national potential, but could be transformative regionally if they were complemented by our national payment systems becoming regionally interoperable. It is the power of interoperability that is at the foundation of what has made Amazon so disruptive to retail and eCommerce as a whole. This more ambitious agenda requires a holistic view on the role we see for technology in finance.”

Turning to the creation of a global financial niche, Gooden suggested that, at a much larger scale, and recognising the disruptions that are taking place, policymakers and leaders in the capital markets must consider how they and the country can differentiate themselves globally.

“How can we do this to create a competitive advantage for Jamaica in financial services that allows us to not only accelerate the pace of growth in economic activity, but to do so in a sustainable way that transforms the economy and lives of our people?” he queried.

In responding to this question himself, he trumpeted Vietnam as one such country that has been capitalising on the current advances in technology, creating a booming financial technological hub.

Gooden noted that Vietnam, which is currently on the path to becoming Southeast Asia’s ‘Silicon Valley’, barely had any information technology (IT) companies 15 years ago, but now boasts almost 14,000 businesses spanning hardware, software, and digital content.

CONTRIBUTORS TO VIETNAM’S TECHNOLOGICAL BOOM

Vietnam was averaging a six per cent GDP growth rate pre-pandemic, due in large part to the impressive revenues from the IT sector amounting to US$112.5 billion in 2019, double the 2015 figure. The sector now, in the midst of the pandemic, accounts for 8.2 per cent of GDP.

“Vietnam’s efforts predate the pandemic and are part of a larger long-term plan to become a digital country,” Gooden said.

He noted that the key contributors to the country’s technological boom are:

• Government focus on tech sector being a hub for sustained economic growth
• Support for the sector via a government portal that offers several tools to assist businesses and implementation of a consultant network specialised in digital transformation that has connected over 100,000 clients already.
• Passing of accommodative policies to encourage both domestic and international entrepreneurs to start business through free access to infrastructure, public financing and tax incentives.
• The creation of Tech Park hubs that houses offices and factories for a growing number of international IT and software companies, hardware manufacturers, and infrastructure plants
• Regulator’s support for Fintech by granting e-wallet licences to dozens of licencees. This created fertile ground for startups to deliver financial services via mobile phone
• Home-grown supply of skilled young coders, engineers, entrepreneurs, and students due to a STEM – Science Technology Engineer and Mathematics focused education system; and
• A large influx of tech companies supported by FDI inflows from investment funds in Singapore, Japan, South Korea and the US.

Said Gooden: “The Vietnam government’s commitment to the tech sector is also evident in the National Digital Transformation Program that was launched in June. This programme is aimed at creating a digital government, digital economy, and digital society, while establishing globally competitive digital businesses by 2025. The ultimate goal is to have the country continue to register impressive growth rates driven by growth in its tech sector.”

The NCB Capital Markets CEO urged the nation to consider what it would mean if Jamaica could establish itself as a global leader in the outsourcing of digital financial services, even as he acknowledged that some of the groundwork has already been completed toward establishing the island as a centre of international financial services.

CREATION OF VALUE-ADDED JOBS

He added: “How can we build on that work using technology as the differentiator? We are now putting in place the technology and the framework to do digital currencies and digital assets. The central bank digital currency is being piloted and there are plans for a full roll out later this quarter. The Government also has plans to grow the global services sector (GSS/BPO sector) through the creation of more value-added jobs in the industry offering services such as information technology outsourcing, animation and legal process outsourcing.

“Over the next five years, the strategy will focus on, among other things, building out niche services. It has identified several niches in the higher value segment to shift the current GSS/BPO services mix to 40 per cent of the jobs being in higher valued niche areas from its current 20 per cent.

“The Government has been working through public private partnerships to build skills in coding and software development and so we have already begun investing to build skills set among our people in technology. What if we leverage the intellectual capital in financial services and technological infrastructure to create an advantage? I ask again, imagine what it would mean if we could do this to create a niche for Jamaica in the outsourcing of digital financial services?”