Loan consolidation

Consolidation in the Caribbean’s short-term loans market as Term Finance acquires FastCash.

The Caribbean’s short-term loans market is maturing and new financial institutions are emerging as market leaders through growth and acquisition as consumers seek services not offered by traditional banks and credit unions. Meanwhile, domestic banks are also expanding and partnering with these new financial institutions as international banks continue to withdraw from the region. 

A regional consumer debt specialist explained, “People are turning to these new financial institutions because they are offering speed, convenience and competitive interest rates. If you need an unsecured loan up to EC$ 50,000 [~USD 18,000] they are an increasingly popular option but for larger loans you still need to go to a traditional bank.” 

People are turning to these new financial institutions because they are offering speed, convenience and competitive interest rates.”

Regional consumer debt specialist

One such institution, Term Finance, has been growing across the region and recently acquired FastCash Barbados, Fast Cash St. Vincent, and CaribCash in Jamaica. The acquisitions further enlarge Term Finance’s portfolio, making it one of the largest and most diversified unsecured lenders in the Caribbean. The company has disbursed USD 300 million to over 100,000 customers since its incorporation. 

A former Fastcash employee explained Term Finance’s interest, “Fastcash was doing very well at the time of the acquisition. It offers a quick turnaround time: disbursing funds within 24 hours, sometimes in as little as two hours. So, it became the go-to financial institution if you were looking for an unsecured loan. If your employer is part of the network all you have to do is bring in proof of address and be interviewed by the loan officer. There’s a huge market out there for financial institutions that provide services like these, especially is they have a digital offering.” 

There’s a huge market out there for financial institutions that provide services like these, especially is they have a digital offering.”

Former Fastcash employee, St Lucia

Term Finance’s expansion was turbocharged after First Citizens Bank, a Trinidad and Tobago financial institution, acquired a 19.9% stake in the company. The deal included a combination of synergies and commercial initiatives to provide First Citizen Bank’s customers with additional investment tools, mostly through digital channels. Additionally, Term Finance’s clients have access to First Citizen Bank’s other products and services. 

The growth and consolidation of domestic financial institutions is part of a wider trend driven by the gradual departure of international banks from the region. A consumer debt specialist explained, “International banks are leaving the Caribbean and the local banks, the local indigenous banks, are taking over their assets, portfolios and market share. Some of the major regional banks have been acquiring other financial institutions for example, the Bank of Saint Lucia, I think they are in the process of acquiring a bank. I think this regional consolidation will continue and could result in some pretty interesting businesses. International banks may be withdrawing from the region but they are still investing in regional fintech start-ups that are appealing to younger consumers with limited access to traditional banking.” 

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