As digital technologies spread rapidly throughout the developing world, more and more poor people are creating digital footprints. Financial services providers are using these data trails to build their customer base and develop new products that better serve the needs of the poor. But the lack of regulatory checks on how companies can use personal data increasingly exposes people in low-income countries to risks, such as data abuse and cyber crime. Most countries rely on the Western model of individual consumer consent for data usage, a system that is increasingly unrealistic. Research shows it would take the average person 76 days to read all the data disclosures. In countries where literacy rates are low, language barriers high, and connections unreliable, customers are even less able to give informed consent.
CGAP has concluded that the consumer consent model is broken. New approaches to data privacy and protection are needed. As emerging and developing economies transition toward digital economies, they urgently need to adopt realistic policies that shift more responsibility on providers to safeguard consumers and build trust in digital products. In doing so, they have a unique opportunity to build modern data protection and privacy regimes that are fit for the future. Now is the time for a dialogue about how data can best serve the interests of poor people.
Data generated by low-income consumers’ use of mobile phones and digital financial services can help expand financial inclusion, but its use can also result in the loss of privacy and other harm. These benefits and risks will be explored in this data protection blog series.
WEBINAR 13 JUNE 2019
CGAP analyst David Medine and Renuka Sane, finance professor at the National Institute of Public Finance and Policy in India, provide evidence that the consumer consent model is broken and explain why a new data paradigm is needed, one that puts more responsibility on the service providers instead of consumers.
WEBINAR 15 OCTOBER 2018
CGAP experts Paul Makin and David Medine introduced key vulnerabilities in mobile financial services that expose poor people to fraud and suggested countermeasures to address data security. See also the blog and slide deck.