Responsible Digital Finance

Low-income consumers stand to benefit greatly from more accessible and affordable digital financial services (DFS) offerings, and indeed, evidence from multiple markets confirms that the basic services are highly valued. However, many if not most DFS customers are new to formal finance and have very limited margin of error in their precarious financial lives. Getting their “digital journey” right will be important to meeting their expectations and needs. It also matters to their providers, which need trust from the mass market, large-scale uptake of services, and active usage of diverse services to get the long-term pay-off from their investments in DFS operations. Thus, innovation and the rapid scaling of DFS in some markets raises a question that is central to effective consumer protection in a financial inclusion context: 

What risks do customers perceive and experience with DFS, what are the consequences of those risks for consumers, providers, and financial inclusion outcomes, and how can those risks be addressed?

In 2015, CGAP research identified seven key risk areas for consumers of DFS that could erode or decrease the level of trust of customers and potential consumers of DFS and therewith hamper the adoption and usage of DFS by low-income and vulnerable consumers:

  1. Inability to transact due to network/service downtime;
  2. Insufficient agent liquidity or float, which also affects ability to transact;
  3. User interfaces that many find complex and confusing;
  4. Poor customer recourse mechanisms to help in complaints and problem resolution;
  5. Non-transparent fees and other terms, and overall insufficient product and service information;
  6. Fraud that targets customers, including unauthorized charges and misuse of customers’ personal identification numbers (PINs); and
  7. Inadequate data privacy and protection—clients often have no idea about how their information is used or shared.

To help mitigate these risks and promote healthy development of DFS markets, providers need to identify and adopt improved practices and regulators need to put in place protective measures that reduce harm and build consumer trust and confidence in the digital financial market.

CGAP is collaborating with policymakers and providers in five focus areas with the aim to explore, test and identify good practices for mitigating these risks:

  1. Develop balanced regulatory approaches to responsible delivery of DFS
  2. Explore the role of competition in addressing DFS consumer welfare issues
  3. Build guidance on responsible design and delivery of digital loans and non-credit services
  4. Build guidance on responsible and efficient use of consumer data in DFS
  5. Responsible and inclusive delivery of payments and basic products to low-income and very poor DFS consumers


Balanced regulatory approaches to responsible delivery of DFS

The role of competition in addressing DFS consumer welfare issues

Responsible design and delivery of digital loans and non-credit services

Responsible and efficient use of consumer data in DFS



24 May 2018
CGAP shows how an enabling regulatory framework that is based on four enablers has contributed to advancing digital financial services in 10 countries.
Download PDF: 
English (36 pages)
15 August 2017
There is not enough being done to implement minimum standards in consumer protection for digital credit, and this exposes the industry and consumers to risks such as credit bubbles and mass-blacklisting of consumers in credit bureaus for just a few dollars of debt.
Download PDF: 
English (24 pages) | French (26 pages) | Spanish (26 pages)

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