Mission Objectives To promote networking among Caribbean indigenous • To foster a spirit of goodwill and camaraderie among the commercial banks and related financial institutions with a view to indigenous Banks and Financial Institutions of the region providing a range of services to members to facilitate their with a view to solving their common problems through efficiency, effectiveness and profitability and to influence policy understanding and co-operation. formulation in the Caribbean, particularly that which impacts on • To assist in and influence the development and improve- the practice and conduct of banking and financial services and ment of the codes of conduct and standards of the the development of the region. Banking and Financial Services Industry in the Caribbean/CARICOM Region. • To provide a forum for the exchange of ideas and informa- Values tion on various aspects of operations in order to broaden the scope and knowledge of its officers. • The CAIB is an Association of trusted and proac- tive business partners working together to achieve • To assist its members wherever possible in the areas of common goals and objectives. training, management, systems and processes, inspection or any other related areas of operations. • There is an environment of trust and openness • To collect and disseminate statistical, technical, economic among members. and other information relating to banking and all its • The CAIB values cooperation among its members aspects. as this is critical to the unity and organisation. • To print and publish any magazines, newsletters, periodi- • Members are committed to sharing experiences cals, books or leaflets that the Association may consider that benefit and develop other members and desirable for the promotion of its objects. strengthen the organisation. • To foster an increasing awareness of the presence of its members at Governmental level and to seek assistance in • Relationships both internal as well as external are promoting its objectives. driven by a high level of integrity. • To do whatever is deemed necessary within the limits of its • Relationships among members are characterised members’ powers to develop and strengthen indigenous by an understanding of sensitivity to the needs Banks and Financial Institutions of the Caribbean and concerns of others. Region/CARICOM Region. • Relationships among members are characterised • To amalgamate with any companies, institutions, societies by respect for the views and feelings of each other. or associations having objects altogether or in part similar All members are treated fairly and equitably. to those of this Association. The Magazine of the Caribbean Associationaccount of Indigenous 2005 Banks Inc. contents 4 Chairman’s Message 5 CEO’s Message 6 Regional Round-up 9 Oil Prices, Growth & Debt in the Caribbean: Is there Light at the End of the Tunnel? 13 Caribbean Banking: Looking Good but Caution Warranted 19 An Equity Market Conundrum 22 Knowledge: Your Bank’s Most Important Asset & How to Manage It 24 CBM: Component Business Modeling 27 Visa Stimulates Economic Development 29 How can Regional Banks Buy a Place in the Minds & Hearts of Customers? CAIB Caribbean Account 2005 is a publication of The Caribbean Association of Indigenous Banks Inc. Editor-in-Chief Art & Design Pre-press & Print Mr. Hanzel Manners Leigh Morton Star Publishing Co. Ltd., St. Lucia Editorial & Advertising Mrs. Patricia Hamilton Marketing & Distribution Production CAIB Inc. Editor Morton Publishing Kim Morton [email protected] Copyright © CAIB Inc. 2005 contents 33 Transforming Payment Processing & Tapping Undiscovered Profit 41 Deploying Business Process Management in Banks 45 ABI Financial Group: Leveraging the Opportunities & Mitigating the Risks of the CSME 48 Transforming the CAIB using the Balanced Scorecard 53 Effective Credit Risk Management 59 Implementing Basel II in the Compliance Continuum 63 Cutting off the Money & Uncovering Terrorist Financing 67 Risk Modeling under Basel II: Getting to grips with the Detail 71 Standing Together against Big-Time Fraud 75 Boost Customer Profitability with Predictive Analytics 79 CAIB Members Round-Up 101 The Process Imperative 107 The Changing Face of Corporate Caribbean The Caribbean Association of Indigenous Banks Inc. (CAIB) Address Contact Officers of the Secretariat Chakiro Court Telephone: (758) 452 2877 Mrs. Patricia Hamilton, Chief Executive Officer Vide Bouteille Facsimile: (758) 452 2878 Mrs. Adela Frederick, Manager: Research, Development & Training P. O. Box CP 5404 E-mail Address: [email protected] Mrs. Mary Louis & Ms. Cheryl Delice Castries, St. Lucia Website: www.CAIBInc.org Administration The information contained herein has been obtained from sources believed to be reliable. CAIB disclaims all warranties as to the accuracy, complete- ness, or adequacy of such information. CAIB shall have no liability for errors, omissions or inadequacies in the information contained herein or for inter- pretations thereof. The reader assumes sole responsibility for the selection of these materials and to achieve its intended results. The opinions expressed herein are subject to change without prior notice. Chairman’s Message very year the Caribbean Association of Indigenous Expanding Membership: Allow me to take this opportunity Banks Inc. (CAIB) brings you a magazine packed with to welcome six new Members to the CAIB fold. They are: Ecutting-edge, practical information about the financial Caribbean Union Bank Ltd., Cayman Island Development services sector. This year’s Caribbean Account 2005 is no Bank, Jamaica National Building Society (JNBS), Signia exception. In this outstanding publication, you’ll find up-to-date Financial Group Incorporated, The Belize Bank Limited, and information on the regional environment and on just about The Mutual Finance Inc. It is heartening to see more regional every issue affecting the sector. indigenous banks heed the clarion cry of the Association! We are confident that you will benefit from your participation in the Leveraging our Strength as an Industry: Caribbean CAIB. Not only will you benefit from our strong networking Account has long highlighted the need for industry players to function ,and widen your span of peer associations, you will also strengthen their global positions by acting together – this “com- derive the benefits of shared information about the financial ing together” is the raison d’etre of the CAIB! We must take uni- sector from the Region’s most reliable source. Welcome to the fied positions in order to withstand, and benefit from, global CAIB! shocks resulting from continuing industry deregulation. Conference Theme: “Transformation: The Way Forward”, is The region’s players must also prepare - together - for the fact the theme of this year’s Annual CAIB Conference. Through that compliance requirements will become ever more strin- this theme we encourage you to think outside the box and gent and international in character (particularly under the change the way you do business. Challenge yourselves to take Basel II Accord). For this reason we include a new section in our up the role of leaders in the industry! Throughout this maga- magazine: “Risk Management”, with incisive discussions on zine you will find articles that enable you to think in new ways aspects of risk, and suggestions for regionally-appropriate risk about technology, processes, behaviours, and management modeling. Close to home, nothing better exemplifies the chal- techniques. Using these tools, you can align your organisation lenges attendant on “coming together” than the need to pre- to trends and developments in our very dynamic sector. pare for the Caribbean Single Market and Economy (CSME). Transformation surrounds us and we play a critical role in man- The implementation of the CSME is guaranteed to change the aging the outcome of change. face of regional banking and financial services. Ask yourself: “Is Sydney Maynard: The CAIB would not be where it is today my organisation ready for the CSME; Can we take full advan- were it not for the sterling contribution of Mr. Sydney Maynard, tage of the opportunities it will offer?” who sadly passed away on September 29, 2005. Mr. Maynard Adding Value for Members: Knowledge and information was the first Chief Executive Officer of the CAIB Secretariat. are vital if we are to understand and meet the demands of a He was a driving force in the professionalisation of the new and complex financial landscape. This, Readers, is what Association, and was also responsible for revamping the Caribbean Account 2005 offers. We are very proud to say that Caribbean Account Magazine. A man of integrity, Mr. Maynard two of the CAIB’s offerings to Members, this Magazine and our had a vision for the CAIB and for Caribbean Account, and he Annual Conference, have become the industry platform for worked tirelessly to make that vision a reality. On behalf of the information sharing. This is just one way that the CAIB fulfills its Executive, The Secretariat and the Members of the CAIB, I mandate of providing added-value for Members. extend sincere sympathy to the Maynard family on his passing. He will be deeply missed by his countless friends and peers in Economies of scale and scope have always been a challenge the industry and across the region. for regional financial institutions, and this is another area where the CAIB has created tremendous value for its membership. A Word of Thanks: Thanks to the Executive Committee, As you read Andrea Gaillard St.