Nadine Maitland | Culture change needed for adoption of digital currency

Digital currencies can revolutionise the economy and foster growth through improved e-commerce, they provide safer and more convenient ways to conduct business transactions. However, the introduction of digital currencies in Jamaica has not got the anticipated traction. The adoption rate is lethargic and remains too low to affect the users of cash or the economy significantly. Jamaica’s transformation into a cashless society will require agreement from business-owners, employees and the public.

Jamaica is predominantly a cash society. A CAPRI 2022 report indicates that 45 per cent of wage-earners are paid with cash or by cheque. The adoption of digital currencies/mobile money will require a culture change. This is difficult and the slow adoption of these digital currencies has shown that a culture change or shift is not automatic. Culture is what we do daily. Culture change is how a society takes on new behaviour patterns and social norms.

Countries, such as China, Sweden, Kenya and the United States, have successfully implemented digital currencies. These countries were strident in ensuring that the society was onboard and its people were aware of the potential benefits of these technological solutions. Cultural change can be positively impacted by technology and systems, since they can make certain processes easier. Culture is “the game” since culture change can achieve more than any policy or strategic guideline.

REDUCE

Technological solutions, if implemented correctly and securely, can reduce long wait times at banks and ATMs. However, non-functioning ATMs and the recent robberies of trucks transporting money have caused much fear and anxiety within the society. Consequently, more people are opting to save, source and keep their money in traditional ways, such as partners, round-robins and at home.

The increased use of digital currencies could reduce some of these issues. However, a poll conducted on Twitter by Simone Bowie Jones, a partner in Myers, Fletcher and Gordon, revealed that many people were anxious about using these currencies. Just over 58 per cent of the respondents were not excited or willing to use JAM-DEX, the central bank’s digital currency. Just over 41 per cent said they would use digital currency.

Small, medium and micro enterprises (MSMEs) account for 70 per cent of employment in Jamaica. Yet, the CAPRI 2022 report showed that 72 per cent of the working population prefer cash because they think it facilitates ease of payment. The nightmare of the ATMs not working during peak demand periods cause most people to choose cash transactions.

Many individuals are unsure how digital currencies could save time and reduce the frustration associated with the present options. Paying bills in-person is very time-consuming as it can take up to 40 minutes to get to the bill payment location and complete the payment process. The CAPRI report suggests that it takes two hours to change a cheque in the bank. Though described as “Jamaica’s engine” for growth, over 60 per cent of MSMEs remain informal and can be categorised as unbanked or under-banked. A Bank of Jamaica report revealed that money supply increased from $433,068.20 in March 2023 to $443,941.20 in April 2023.

An article in May suggested that the increased circulation of cash reflects the mistrust for banks. In launching Jamaica’s first central bank digital currency (CBDC) in 2022, the government offered the first 100,000 consumers who signed up for JAM-DEX an incentive of J$25,000 deposit. Only 36,000 people took up the offer even with the incentive. Ledger Insights April 2023 reports that “as of February 2023, only 190,000 customers had been onboarded to the Lynk wallet”. This included 185,410 individuals, 90 small merchants, and 4,500 micro-merchants.

Many business owners and employers are not sure how this technological solution could support their businesses.

SET HOUSE IN ORDER

Improving the adoption rate of digital currencies can positively affect our economy, and by extension, our lives. However, there are some hurdles that are impeding the progress. Firstly, we must address the issues of trust, awareness and stable dependent internet connectivity. Several reports, including the CAPRI 2022 report, suggest that people do not trust government and the financial sector. The recent troubles within the sector and the lacklustre response and lack of forthrightness, be they perceived or real, do no good for the government or the financial sector. A World Bank reports cites Jamaica as having the highest distrust rate in the financial sector. The trust deficit could be a major part of the low adoption of technological currencies.

Another issue hampering the process is the lack of stable and dependent Internet services. The telecommunication companies and the quality of the services they provide must improve. Increased confidence in the technological infrastructure will positively impact the process. Additionally, since one size does not fit all, targeted educational campaigns tailored for different groups could strengthen the proposal. As indicated by Bowie Jones, people are “unsure and uninformed”. As a result, they are unconvinced about the benefits of using digital currencies.

The government has started providing WiFi access in public areas. This is a good start and should be continue since using technological products and services depends on connectivity. Additionally, adopting a culture of transparency, accountability and honesty could be the catalyst that changes public perception. The principal components of the successful implementation of digital currencies are simplicity, safety and ease of use. Digital currency, Alipay, in China, provides advanced security measures, buyer protection policies and real fraud detection management safe guards. These give its users peace of mind and users are comfortable using it across the region. A secure, efficient and inclusive digital ecosystem and a culture that is customer-centric are crucial in these early implementation stages. Reflection on adjustments regarding the present approach and the implementation method is required. Addressing these issues could change the present trajectory.

Nadine Barrett-Maitland, PhD, is a senior lecturer at the School of Computing and Information Technology, University of Technology, Jamaica. Send feedback to columns@gleanerjm.com.