CGAP Report Analyzes Digital Finance Risks for Customers

18 June 2015

June 18, 2015 - Washington, DC - A new CGAP report provides the first comprehensive analysis of the risks customers face when using digital financial services. It also identifies promising solutions to help digital finance providers strengthen risk mitigation, which in turn will boost consumers’ trust in and use of innovative services.

Doing Digital Finance Right: The Case for Stronger Mitigation of Customer Risks analyzes consumer research findings from a total of 16 countries across Africa, Asia, and Latin America, including quantitative surveys in 9 countries, case studies in 4 countries, and a variety of qualitative research. The report identifies seven key customer risk areas:

  1. Inability to transact due to network downtime;
  2. Insufficient resources and preparedness of agents;
  3. Complex and confusing user interfaces;
  4. Poor means for customer recourse;
  5. Nontransparent fees and other terms;
  6. Fraud that targets customers; and
  7. Inadequate data privacy and protection.

The report strongly suggests that providers can and should take action to improve the safety, reliability, and transparency of digital financial service products, channels, and systems, as well as help customers to understand and mitigate associated risks. Such measures will also reduce barriers many customers face and encourage uptake and active use of digital financial services.

“With the use of agent networks, new technology and longer value chains that can include banks, telephone companies and government, digital financial services such as mobile money, offer unprecedented access to formal financial services globally. The research, however, highlights how these same factors that make digital financial services so promising also expose customers to unique risks.” said Graham Wright, Managing Director of MicroSave, which led research for three of the country case studies.

The authors identified five critical priorities for provider and industry leaders, including: improving service reliability and robustness; making the customer interface more user friendly; strengthening agent quality, management and liquidity; combatting fraud affecting customers; and improving handling of complaints, queries and redress.

“It's good to see collective action by industry such as the mobile money sector’s Code of Conduct, which has been endorsed by 12 of the largest telco groups that together serve over 80% of total active mobile money customers globally,” said Kate McKee, Senior Advisor at CGAP and lead author of the report. “However, research for this paper reveals that more needs to be done both by the industry and regulators to get digital finance right for customers, particularly those who are lower-income.” 

Media Contact: Esther Lee Rosen, CGAP, [email protected], (202) 458-0147

CGAP (the Consultative Group to Assist the Poor) is a global partnership of 34 leading organizations that seek to advance financial inclusion. CGAP develops innovative solutions through practical research and active engagement with financial service providers, policy makers, and funders to enable approaches at scale. Housed at the World Bank, CGAP combines a pragmatic approach to responsible market development with an evidence-based advocacy platform to increase access to the financial services the poor need to improve their lives