Financial Crime World

Solomon Islands’ Financial Sector Sees Modest Growth, Challenges Remain

The financial sector of Solomon Islands has experienced modest growth over the past year, with some challenges remaining to be addressed. According to data from the International Monetary Fund’s (IMF) 2019 Financial Access Survey, there are some positive trends.

Bank Branches and Automated Teller Machines (ATMs)

  • The number of bank branches in Solomon Islands has remained relatively steady over the past year, with 10 branches as of 2019, a slight increase from 9 in 2018.
  • The number of automated teller machines (ATMs) also showed a modest growth, reaching 45 in 2019, up from 42 in 2018.

Deposit Accounts and Depositors

  • The number of depositors with commercial banks increased significantly, rising to 193,564 in 2019 from 152,348 in 2018.
  • The number of deposit accounts also saw a notable increase, reaching 200,467 in 2019.

Challenges Facing the Financial Sector

  • Modernizing the country’s financial system is one of the key priorities for the Asian Development Bank (ADB). To achieve this goal, ADB is advocating for the deployment of branchless banking to reach remote areas.
    • However, there are concerns about the high costs associated with supporting bank agents in small population bases and security risks related to moving cash between agents and commercial bank branches.
  • Another challenge facing Solomon Islands’ financial sector is its payment system. The current manual method for settling interbank transfers is time-consuming and risky.
    • ADB has urged the government to establish a national payments system, but one potential stumbling block is the negotiation of interchange fees among commercial banks.

Central Bank’s Efforts

  • The Central Bank of Solomon Islands (CBSI) has taken steps to address these issues, including establishing a national financial inclusion strategy from 2016 to 2020.
  • However, more work needs to be done to achieve sustainable growth in the country’s financial sector.

About the Asian Development Bank

The ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific region while eradicating extreme poverty. Established in 1966, it has 68 member countries, including 49 from the region. The bank’s main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

Contact

Pacific Liaison and Coordination Office Level 20, 45 Clarence St, Sydney, 2000, Australia +61 2 8270 9429 www.adb.org/publications/pacific-finance-sector-solomon-islands