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Belize: Banking in the modern era

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Posted: Thursday, August 24, 2017. 10:13 am CST.


By BBN Staff: Globally, the last few decades have seen rapid technological advances and commerce has boomed along with it. In this time, Belize has seen its fair share of moderate advances in several areas, albeit at a seemingly slower pace than regional neighbors and often at higher costs.

The World Bank’s Doing Business in the World 2017 report recently ranked Belize 112 of 190 countries, which is actually an improvement of Belize’s ranking in the 2016 report.

Among other shortcomings affecting economic development are high Internet rates in comparison to corresponding rates in the region, though new fiber optic lines are being installed throughout the country which are expected to boost speeds significantly. There are other factors that have hindered economic development, and that list is quite exhaustive and requires a conversation on its own.

But Belize recently saw a quiet triumph, the effects of which will soon become evident as a string of new electronic banking options have become available to banks, making payments and payrolls much easier than before. With the new system, there is absolutely no reason that an employee who receives a cheque from an employer, regardless of cheque type, should not be able to receive his/her pay if presented by the established cutoff of 2:00 p.m., by the end of the day or latest by the end of the next day.

Belize had lagged so far behind in developing its automated banking system while other countries in the region invested in the complex systems, it actually paid off to the country’s benefit. By the time the Central Bank commissioned a study of the national payment system in 2006 and actually began rolling out the program in October 2016, the technology had advanced quite rapidly, and now Belize boasts the most modern and best structured system in the region.

Belizeans may already be experiencing some of the benefits of the new system with improved cheque-clearing times, now clearing the same day if all the proper information is entered into the system by the employer whereas cheques would take up to 7 days to clear before in some instances. There are other services that local banks have been offering as a direct result of the new Automated Payments and Securities Settlements System (APSSS), which has made doing business in the country more efficient than ever. Effectively, APSSS allows the electronic transfer of funds for large and small value payments.

For the team at the Central Bank that worked much of the last few years developing the system, it was a project of passion and dedication.

The first study of the country’s national payment system was done in 2006 and updated in 2010. That same year a reform of the national payment system was approved by the Central Bank’s Board of Directors and the World Bank provided technical assistance for the project. A three-year process then began to draft a strategy document, an implementation plan, a request for proposal and a legal framework for the system. During this time, the Central Bank also transitioned a working group with commercial banks, the Credit Union League and the Belize Treasury Department that was already working on standardizing cheques, to a NPS Working Group. The working group was part of the entire process and work began with the standardization of cheques then moved on to a full-fledged reform of the overall payment system.

In 2014, the Central Bank published its request for proposal to vendors recommended by the World Bank and selected a company named Montran from New York, USA to develop the system. Montran has provided services to over 40 Central banks across the globe. The contract was signed in 2015 and after several months of testing, the system went live on October 21, 2016 with electronic funds transfer and central securities depository services becoming available.

So how does the new APSSS system benefit the average Belizean citizen and why does it matter? The Central Bank, as Belize’s financial regulator, has a mandate to advance the country’s economy by facilitating sustained economic growth, protecting the value of the dollar, and assuring a safe, sound and efficient financial system. Ensuring that Belizeans have access to the most efficient banking services and systems is key to the country’s long term development.

Due to the complexity of the reform, the project was implemented using a two-phased approach with the second phase forming part of a 5-year plan for continuing reform of the financial infrastructures. The first phase included the legal framework and the the information system, which encompasses a Real-time Gross Settlement system (RTGS) to process high value payments; an Automated Clearing House (ACH) to process low value payments; integration of government payment and collection mechanisms to improve efficiency and convenience; and a Central Securities Depository (CSD) system to manage primary market activities.

The new system allows for direct and instant payment from an employer’s bank into an employee’s bank account, even across different banks. There are several other components of the APSSS that are not being offered to the public as yet while commercial banks upgrade their systems and infrastructure to have the services fully functional. One such aspect, the Instant Funds Transfer (IFT) will allow people to wire money from their account to any local account instantly with 24/7 service.

The Central Bank team also pointed out that the new system has had the effect of improving cash flow for businesses. According to the Central Bank, cheque-floating, had become somewhat of an issue in Belize’s banking sector with employers often writing cheques with insufficient funds in their account because they knew they had 3-7 days for the money to clear in the account. With the new APS3 system, however, the employee’s account is credited the next day but the funds from the employer’s account is deducted same day or as soon as the cheque is deposited.

In fact, the Central Bank is advising the Belizean public to reduce the use of cheques and instead opt for one of the more efficient and convenient electronic payment options, which can facilitate high and low value payments in a matter of minutes or within the same day. The Central Bank even embarked on an awareness campaign about the benefits of using electronic payment options.

Looking ahead, the Central Bank intends to complete the second phase of the reform, which involves development of interbank money markets and assessment of international remittances over the next next several years. The Credit Union League has also expressed interest in developing infrastructure for participating the APSSS system, which would see full and complete integration of Belize’s financial system. That is probably sometime away, however, but will have a significant impact if and when credit unions are able to access the APSSS system.

One other project the Central Bank intends to undertake is the implementation of a National Switch, which is a network that would connect all point of sale (POS) terminals and ATM’s across the country so that any local debit card would be able to work at any POS terminal or ATM anywhere in Belize.

The upgrade to the country’s national payment system is certainly a welcomed upgrade and its true benefits will only become realized when all banks are able to offer full functionality of APSSS capabilities, but Belize has made a significant stride and has now entered the modern age of banking and financial transactions.


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