Six major Cayman banks have come together in a partnership to install an automated clearing house that will ease the transfer of electronic funds. The payment network had a soft launch in March, and its new procedures should increase the rapidity of transactions becoming official in Cayman, according to the Cayman Islands Bankers Association.
“What used to happen is you would deposit a transaction in the bank. They would have to process that, and over a two-day period, they would have to exchange checks between banks,” said Richard Lewis, chief operating officer of the Cayman Islands Bankers Association. “All of the transactions that went between banks were settled in most cases by way of check. Even if you were doing an electronic transfer, behind the scenes, you were making a check transfer and there were delays on that.”
Now, according to Brian Esau, the pace should be far quicker.
Mr. Esau, president of the Cayman Islands Bankers Association, said that as long as bank customers make their transactions between 6 a.m. and 2:30 p.m., the funds should be available on that same business day.
Before, he said, they could take as many as two or three days to clear. As well as being beneficial to the consumer, Mr. Esau said it is also an incentive for the banking institutions.
“It’s good for the banks for several reasons,” said Mr. Esau. “It should reduce the volume of check exchange in the marketplace. Check exchange probably has higher costs and higher risks and longer settlement time. By converting this to ACH/EFT, there’s increased efficiency for the banks as well.”
Butterfield Bank, Cayman National Bank, CIBC First Caribbean, Fidelity Bank, RBC and Scotiabank are the participating institutions, and electronic transfers will be accepted in Cayman or American dollars.
The enhanced electronic transfer network will allow banks to offer a better standard of mobile banking to its customers and will bring to Cayman’s banking industry the technology used around the world. Automated clearing houses are already used elsewhere in the Caribbean, said Mr. Esau.
“It’s modernizing the payment infrastructure in the Cayman Islands and bringing it on par with other major jurisdictions like Canada, the United States and Great Britain,” he said of the automated clearing house. “Why we’re a little bit different animal is we don’t have a central bank. What happens is one of the six participant banks – in this case, Butterfield – will act as the settlement bank. All the electronic transactions will effectively settle through the banks’ respective accounts at Butterfield.”
ACH (Cayman) Limited, a company formed by the partnership of the six retail banks, signed a contract with Prism Services (Cayman) Limited, effective Sept. 15, 2017, for the provision of local automated clearing house services.
The Cayman Islands Bankers Association encourages Cayman residents to speak to their respective banks about how electronic fund transfers will impact their transactions in the future.
The banks are cooperating and collaborating to change the way local customers conduct transactions, said Mr. Esau, but the bottom line is that it should be a net positive for everyone involved.
“We’re effectively competitors but we’re doing this in the interests of the marketplace, the consumer and in our own interests,” said Mr. Esau. “Notwithstanding that this happens, it doesn’t in any way diminish our ability to still be competitive or differentiate. It does not preclude that.”
CIBA has composed a FAQ page on the subject that can be accessed at www.cibankers.org/automated-clearing-house/frequently-asked-questions-faqs.