National Commercial Bank Jamaica Limited (NCBJ) is increasing its investments in technology and working to improve its service standards related to its automated banking machines (ABMs) and point of sale (POS) network which various consumers have noted to have higher downtimes at the end of every month.
This commentary came from NCBJ Chief Executive Officer Septimus "Bob" Blake at the NCB Financial Group Limited (NCBFG) investor briefing last Friday. Blake is also the president of the Jamaica Bankers Association.
"There's a need to continue to pursue technology modernization which includes payment infrastructure, operational enhancements and improved resilience. We have the largest network and scale in Jamaica, and we continue to invest in it to ensure that we have continuous uptime or better availability. It has been improving, but it is not where we need it to be. We're going to continue to make the necessary investments to improve availability and also to ensure that we reduce the downtime. We have convenient locations and continue to invest in ABMs offsite and on-branch," Blake said on the matter.
NCBJ has the largest ABM and POS network in the country, which means that downtime in its systems can drastically affect commerce islandwide. In NCBJ's 2016 annual report, it was noted that it had 288 ABMs and financial kiosks along with 18,026 POS terminals. The Bank of Jamaica's payment data bulletin for September 2016 revealed that there were 543 ABMs and 26,026 POS devices installed which would mean a market share of 53 per cent for ABMs and 69 per cent for POS devices at the time. The May bulletin revealed that there were 804 ABMs and 47,581 POS devices installed. NCBJ closed five branches on May 6 but left the bank-on-the-go options available.
After the 23rd or 25th of any month, many users complain about ABMs being out of cash or not in service while some months see merchants noting that POS devices aren't working. Senior government advisor Delano Seiveright tweeted last week that the banks need to improve their service after noting the difficulty experienced by many users in finding ABMs with cash. He tagged several banks, the BOJ and even the Ministry of Finance and the Public Service.
"There are various faults which can be attributed to hardware, software or sometimes attributed to technology, connectivity and then maybe issues related to cash. I'm happy to say that by and large, we've not seen any significant outages in cash. We have connectivity issues from time to time and that's due to telecoms. We work with our providers to improve that level of availability and constantly calibrate to ensure cash levels are in the system. Hardware faults happen because of the usage of this large network and what we do is ensure that the service level agreements that we have with our various partners, we continue to calibrate on those. We have seen availability improve over time, but we're not yet where we want to be and we're cautiously working to ensure we get there," Blake added.
The CEO noted that less than five per cent of all financial transactions occur in branch now and that the bank is continuing to invest in security to limit fraud as well. This includes being PCI (payment card industry)-compliant, placing greater emphasis on mitigation and detection, as well as working with regulators and law enforcement agencies.
"Banking is one of the most heavily regulated industries and that's where we operate. Our approach has always been to embrace regulations which are forward-looking, enabling and it balances the interests of stakeholders, customers, regulators and shareholders to ensure that we have better outcomes. We believe that the outcome of such a piece of regulation can be positive for all as long as it seeks to balance the interests of various stakeholders, customers and regulators. It is something we embrace," Blake added, on the BOJ (Financial Service Consumer Protection) Act, which is set to be introduced by the finance minister in the coming months to protect consumers in the financial industry.
"Our systems are actually running on top of infrastructure from our communication partners. In recent times, we have had some challenges on the payment platforms and we've had to work very closely with these communication partners to address the underlying causes driving that instability. For us to improve the overall, stability, reliability and security of these platforms, we are making investments to move them to a cloud-based infrastructure. We see that as the future for the business, not just here, but across the Caribbean. We're looking at cloud as the innovator to go and bring us better flexibility through technology. It will allow us to continue to improve and innovate our platforms that will lead to an overall better customer experience not just for our merchants, but also for our customers on a grander scale," said head of the group information technology division Ramon Lewis at the NCBFG annual general meeting in February.
To this end, NCBFG is focusing heavily on building out TFOB (2021) Limited, which currently operates the Lynk mobile application. Apart from it being free to execute transactions at the moment, it's the only approved wallet which allows persons to use JAM-DEX. There are more than 120,000 individuals and 2,000 merchants on the platform. A merchant solution is set to be introduced this quarter. NCBFG invested $2.05 billion into TFOB in 2021.
"I don't agree that COVID-19 hasn't radically shifted payments. That is certainly not our experience. We've seen significant shifts in terms of transaction volumes, the utilisation of alternative channels and so on by our customer groups. Overall, transaction volumes have grown. When you look at it in terms of percentages, there is a significant shift and my expectation is that two things will happen with the adaption of technology," said NCBFG CEO Patrick Hylton.
NCBJ earned $10.95 billion for payment services in 2021 with an expense of $4.64 billion leaving it with a net balance of $6.31 billion. For NCBFG's nine months, the payment services segment saw revenue rise 34 per cent to $18.49 billion, but operating profit declined by 31 per cent to $2.24 billion on higher expenses. However, transaction volumes have increased according to deputy NCBFG CEO Dennis Cohen.
Hylton is looking forward to continue building out the financial ecosystem and further integrate the various businesses through the complementary uses of its services. He cited the NCB Capital Markets GOIPO platform which was used recently in Trinidad and how Lynk is complementary to other services in the NCBFG.
"We're going to reduce the cost to serve and improving the quality of the service. Many of these transactions that people execute on Lynk at this moment are executed free of cost. It reduces the cost to serve both for the institution as well as the consumer. The fact that it can be done without the need to engage persons or any physical infrastructure also facilitates in enhancing the customer experience. I think it is more a facilitator of future trends, and the way in which the world is going is where you have to go. We believe our responsibility is to lead that change and in a real sense, be the change we need to see in this industry," Hylton closed.