How Responsible Is Digital Finance? 10 Global Insights

02 December 2014

How responsible is digital finance today? Around this time last year, a small group of financial inclusion experts at the FI2020 conference in London sat down to discuss what we know and what we don’t know about how consumer risks are addressed in new and innovative digital financial services. The reluctant consensus was that little is known and there is still a lot to learn. Have we made any headway in a year’s time?

Photo Credit: Nitai Mondal 

Although the broader financial inclusion community seems to agree that this area deserves more attention, it also agrees that there are significant gaps in our knowledge of both the perceptions and experiences of consumer risks with digital financial services globally. In response, CGAP conducted a field-wide Global Pulse Survey among policy makers, financial service providers, consumer advocates, and foundations involved in providing digital financial services. Over the course of two months in 2014, 237 respondents from around the world shared insights and experiences on the prevalence of mitigation strategies and next steps for combating consumer risks in digital finance. Here are the top ten survey insights based on participants’ responses:

1. Seventeen percent believe that digital financial service providers are adequately protecting consumers.
A majority of respondents feel that digital financial service providers can do more to safeguard consumers. Only 17% agree with the statement: “Digital financial service providers are currently doing an adequate job of protecting consumers.” Even among financial service providers, only 35% responded that they were doing an adequate job.

2. Thirty-four percent believe that the digital delivery of financial services poses less risk to consumers in developing countries than traditional delivery.
A little more than one-third of respondents believe that digital delivery is less risky, though providers and policy makers were divided on the matter. Fifty-seven percent of financial service providers replied that digital financial services are less risky for customers, but only 24% of policy makers agreed.

3. Digitally delivered credit is believed to be the riskiest digital product for consumers.
Ninety-four percent of respondents believed there was some risk to the digital provision of credit. However, respondents also felt that digital savings and insurance products carry potential risks: more than half flagged these products as high or medium risk. Interestingly, government-to-person payments are seen as the least risky digital products: more than 60% of respondents believe there were either no clear or only slight risks associated with using these products.

4. Eight-eight percent believe low-income and excluded populations—and particularly illiterate persons—are especially vulnerable when it comes to using digital financial services.
Eighty-eight percent of respondents believe that vulnerabilities of illiterate populations merit “particular consideration” when providing digital financial services. Other vulnerable populations were not far behind: risks to the elderly (77%), rural populations (72%), and women and girls (50%) all merited “particular consideration.” Urban populations were seen as the least vulnerable to the risks of DFS.

5. Eighty-five percent believe fraud and inadequate consumer recourse are particularly concerning.
However, agent misconduct, data privacy, and transparency were not far behind. The only consumer risk included in the survey that did not break the 80% barrier for moderate to serious concerns was safety of consumer funds, which reached just over 70%.

6. Forty-eight percent cited agent misconduct as the most observed consumer risk with digital financial services.
Nearly 50% of respondents have experienced or observed agent misconduct in the provision of digital financial services. Lack of consumer recourse and fraud were also widely observed in more than 40% of respondents surveyed.

7. Only eight percent have not observed any consumer risks to digital financial services.
Among financial service providers this percentage is even lower at only six percent.

8. Twenty-seven percent have been able to mitigate consumer risks to their satisfaction.
Mitigating consumer risks to digital financial services appears to be either very new or very challenging. When asked whether they or their institution have been able to mitigate or resolve digital financial service risks to their satisfaction, more than half of respondents said “not yet.”

9. Ninety-seven percent believe that digital financial service providers bear the primary responsibility for mitigating consumer risks. However, there is also a sense from respondents that risk mitigation should be a joint effort: Two-thirds of respondents felt regulators also bear at least medium responsibility to mitigate risks, and more than half felt that consumer advocates, international organizations, and donors share this responsibility as well.

10. Eighty percent of service providers and 90% of policy makers think there may be a need to establish principles, standards, or a code of conduct to help guide responsible behavior in digital finance.
Policy makers and providers overwhelmingly agreed on the need for a standard set of principles regarding digital financial services.

In the months since CGAP conducted this survey, interest in protecting customers from the risks of DFS has intensified. Responsibility in digital finance was a core focus at several of this year’s premier financial inclusion events, including the AFI Global Policy Forum, the Responsible Finance Forum, the G20 Global Partnership for Financial Inclusion meeting, the Basel II meeting among Standard Setting Bodies, and most recently, the GSMA Mobile for Development Summit (where a ground-breaking code of conduct for mobile money providers was released).

To be sure, there are many questions about the actual incidences and consequences of risks that CGAP’s online survey could not answer (but stay tuned for an upcoming Focus Note on the topic that will shed some new light). The search for answers and insights will continue as digital financial services continue to take up more of the market.


Submitted by John Owens on
We are also happy to add that AFI's Digital Financial Services Working Group (formerly the Mobile Financial Services Working Group) had issued a guideline note on responsible digital financial services focused on agents and e-money services in March of 2014. The note sets out some of the recommended minimum standards for digital financial service providers as well as agreed upon list of principles for regulators and policy makers as well. For more information see:

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