NB Financial Health

Tuesday
July 22
2014

Eric Tyler and Jamie Zimmerman

Finding A Responsible Way Forward For Digital Finance: A CGAP global survey looks to shape the roadmap

From mobile phones to prepaid cards, digital finance is increasingly providing avenues for the next billion to participate in the formal financial sector. Between 2011 and 2013, registered mobile money users almost tripled, growing to more than 200 million users around the world, according to the GSMA. However, with these opportunities, digital finance brings new risks for consumers and poses new challenges for financial providers and regulators.

Often overlooked and potentially underreported, these risks can be wide-ranging, from identity theft and agent misconduct to data privacy violations and fraud. For example, last year alone, there were 63,437 security-related incidents and 1,367 confirmed data breaches globally.

As momentum and enthusiasm for digital financial services as a catalyst for financial inclusion grow globally, so does an interest to better understand these risks faced by consumers. At the end of the summer, G20 leaders from around the world will be convening in Australia to discuss their commitment to the Principles for Innovative Financial Inclusion. Endorsed by the G20 at their Toronto Summit in May 2010, these principles describe what the G20 considers to be the hallmarks of good practice in financial inclusion. They break up the complex issue of financial inclusion into specific elements that governments, financial institutions and other stakeholders can more easily understand and incorporate into policy, and begin to encompass data privacy measures, transparency of terms and conditions, and rules governing liability.

The G20 meeting will be preceded by a two-day global forum on Responsible Digital Finance that will put into focus the multidimensional picture of what responsible finance looks like in an increasing digital landscape. The convening will build on the global Alliance For Financial Inclusion recently released guidelines on consumer protection in mobile financial services outlining the nature of the vulnerabilities impacting the sector, including identity theft, lack of consumer recourse, and mobile money agent misconduct, among others.

To help bolster these discussions and shape the broader agenda with on-the-ground experiences and perspectives, CGAP has launched a global pulse survey on responsible digital finance. The survey will help the growing digital finance field explore some critical areas, such as:

? Identifying particular consumer risks that arise when financial services are delivered digitally;

? Exploring how leaders in the private, public and non-profit sectors have addressed (or prefer to address) incidences of risks, and;

? Shaping the global dialogue on practical next steps and collective action to advance digital finance responsibly.

Results from this brief and confidential survey will help shed light on the state of practice and drive forward financial inclusion, both digitally and responsibly. Here is your chance to share your experiences and perspectives, and guide the agenda down the right path.

Eric Tyler is a World Bank consultant and a research fellow at the think tank New America Foundation. Jamie M. Zimmerman is a senior associate at Bankable Frontier Associates.

Categories
Education
Tags
digital payments, financial services, mobile banking, mobile money, research