How can poor people be better represented in financial policy making? This is a question that the financial inclusion community has been asking itself for the past two decades. Despite some progress over the years, more work is needed to elevate consumer voices so that financial policies and regulations better protect the poor and improve their lives. Fortunately, there are some opportunities to do so on the horizon.
What is the collective voice of consumers?
In most markets, consumers are not adequately represented in financial policy making. The financial inclusion community has made some progress on this front by injecting findings from demand-side customer research into policy discussions. For instance, the World Bank Global Findex provides extensive data on the unbanked and underbanked. Financial diaries also provide invaluable insights.
However, demand-side research can go only so far in elevating the consumer perspective. It offers a snapshot in time but doesn’t create the long-term channels and opportunities that are necessary for consumers to collectively voice their needs and concerns.
Elevating the collective consumer voice refers to leveraging the broader range of channels where consumers collectively share their experiences and perspectives, such as through consumer advocacy organizations and other groups that represent low-income segments, social media platforms, investigative media reports, company complaint data and ombuds or regulatory complaint data.
Why pay attention to the collective voice of poor consumers now?
COVID-19 has exposed gaps in policy makers’ knowledge about significant segments of low-income populations. Whether they be urban waste pickers who cannot access cash assistance or rural women who must pay fees to agents to deposit their paychecks, low-income consumers need to be heard so policies can be created to help them instead of harm them.
Here are some of the reasons why now is the time to raise the collective consumer voice:
- Increased access to financial services has not been accompanied by a significant reduction in the risks of using financial services. Even before COVID-19, fraud was on the rise. The pandemic has merely exacerbated the situation.
- Low-income people’s increased use of social media and mobile phones is generating data that reflect the needs of consumers and that provide great opportunities to aggregate and elevate consumer voices.
- Regulators also are starting to think about financial consumer protection less in terms of a box-ticking exercise and more in terms of achieving consumer outcomes. Capturing the collective voice of customers could reinforce this trend.
How can the voice of consumers be strengthened?
CGAP has spent the past few months doing initial research on the collective consumer voice. In speaking with various stakeholders, it is clear that it is not the responsibility just of poor people or those who represent them to raise their voice. All stakeholders must seek out the perspectives of marginalized populations, especially women and elderly, rural and disabled consumers.
We see opportunities for three key stakeholders to elevate the collective voice of poor consumers: consumer associations, regulators and donors and funders.
Consumer associations are an obvious place to start. The financial inclusion sector can leverage its expertise in the complexity of regulating digital finance to equip consumer advocates, civil society and groups representing specific segments of poor people to engage in policy making. CGAP recently partnered with Consumers International, a global membership organization of consumer groups, to explore the extent to which consumer organizations in low- and middle-income countries are engaging in financial sector issues. We will share findings soon in an upcoming blog post.
Regulators can invite consumer representatives to participate in consumer advisory panels and solicit feedback on proposed regulations. The regulators we have spoken with see value in obtaining more data on the consumer perspective and in hearing directly and formally from consumers, although they expressed uncertainty about the best ways to do so. Another avenue policy makers may explore is how to use technology to listen to the collective consumer voice. Examples include Twitter analyses that reveal financial challenges in real time.
Donors and funders, particularly of financial inclusion programs, could engage to a much greater extent with the collective voice, including through organizations that represent consumer interests and by working with regulators and providers on ways to link the needs and challenges of the people they work with to financial services policy making. Some donors are active in this area, and more are interested in engaging.
As we deepen our research, we hope to develop guidance for funders on how to support the collective consumer voice through partnerships with governments, regulators and the nonprofit sector. Strengthening the collective consumer voice may not guarantee a financial sector where everyone is treated with absolute respect and fairness, but we don’t see how it’s possible to get there if consumers — especially the poorest and most vulnerable — don’t have a seat at the table.
Matthew Soursourian, formerly part of CGAP’s voice of the consumers team, contributed to this blog.