JDIC Assures Digital Banking Users of Deposit Protection

Digital access does not alter the protection provided under the Deposit Insurance Scheme.

This assurance comes from the Jamaica Deposit Insurance Corporation (JDIC) as it addresses the implications of the increasing use of digital banking services in Jamaica for deposit insurance protection.

Speaking during a Jamaica Information Service (JIS) ‘Think Tank’ on Wednesday (October 14), Director of Monitoring and Risk Assessment at the JDIC, Dawn Marie Brown, explained that persons must first understand the Corporation’s core function and mandate, as well as the distinction between traditional banking and digital banking.

“They are basically the same banking [formats]. They are different delivery channels, depending on your choice. Some customers may choose to sit in their living room and do their banking or go to an ATM (Automated Teller Machine). Another customer might prefer to go into the branch and talk to the tellers. One thing we can assure you is that, irrespective of which banking option you may choose, your deposit, your savings in our institutions… in the 11 institutions… are covered and are protected by the JDIC,” she stated.

Established in 1998, the JDIC was created to protect depositors by providing insurance coverage for eligible deposits, thereby reducing the likelihood that the failure of a financial institution would result in recourse to public funds.

The current coverage limit is J$1.2 million per depositor, per financial institution, per ownership category.

The JDIC provides that protection to depositors with funds in regulated deposit-taking institutions (DTIs), which currently comprise 11 institutions: eight commercial banks, two building societies and one merchant bank.

Explaining how deposit insurance coverage applies in the evolving digital space, including products such as digital wallets, Director of Intervention, Resolution and International Relations at the JDIC, Camielle Frazer, told the Think Tank that coverage depends on how the funds are held.

“While the financial landscape is changing, it’s evolving digitally… as the deposit insurer, we continue to adapt. The providers that are offering the digital products, they are not banks; JDIC protects the depositors in the banks. But these providers, they would get approval from Bank of Jamaica (BOJ), and they are also required to hold the funds for the customers in a bank,” she informed.

“These funds in the bank are then protected by deposit insurance. They are protected based on the ownership category I mentioned earlier, under the trust accounts. They are considered trust accounts, so that the providers for these digital products, they would have all that money for the customers held in a bank,” Ms. Frazer added.

In the event of a bank failure, records maintained by the digital service provider would be used to determine the amount payable to each depositor, with the funds remaining separately protected up to the J$1.2-million deposit insurance coverage limit.

This protection is separate from the coverage provided for other accounts, including individual and joint accounts.

Consequently, funds held on a card would be insured up to the J$1.2-million coverage limit, based on the records maintained by the service provider.