Managing Consumer Risks in DFS

Matthew Soursourian

16 March 2015

Research Questions

What risks do customers perceive and experience when using DFS?

What are the consequences of those risks for consumers, providers, and

financial inclusion outcomes?

How can these risks be addressed?

The Four CGAP Deep Dive Countries

Colombia

Bank-Led

5.2M users (2013)

Users grew by 61%

(2011-2013)

Primarily bill pay

Uganda

MNO-led

14.2M users (2013)

Users grew by

389% (2011-2013)

Primarily P2P

Bangladesh

Bank-led

15M users (2014)

Users grew by

183% (2013-2014)

P2P-OTC driven

The Philippines

Hybrid/partnership

26.7M users (2013)

Users grew by 34%

(2011-2013)

Salary and P2P

Source: CGAP Deep Dives

Eight Key Concerns of DFS Customers

1. Inability to transact due to network downtime

2. Inability to transact due to insufficient agent liquidity

3. Complex and confusing user interface

4. Poor customer recourse

Eight Key Concerns of DFS Customers

Cont’d.

5. Lack of transparency for fees and terms & conditions

6. Agents charging unauthorized fees

7. Fraud

8. Inadequate data privacy and protection

Five Suggested Priorities for Industry

Improve service reliability1

Improve user-friendliness of customer interface

2

Strengthen agent management & liquidity

3

Combat fraud and agent misconduct4

Improve handling of complaints, queries, and recourse

5

Roles and Agenda for other DFS Stakeholders

Regulators

Transparency

Agent training and oversight

Complaints handling and

recourse

Development Organizations

Close the evidence gap

Incentivize RDF through dialogue

and action

Consumer-Focused

Organizations

Provide more and better information

Refine financial capability and

consumer protection

Elevate consumer voice,

representation and empowerment

For more information:

Visit:

http://www.cgap.org/topics/responsible-digital-finance

And look for upcoming publication:

McKee, K., J. M. Zimmerman, and M. Kaffenberger (forthcoming).

“Doing Digital Finance Right: The Case for Stronger Customer

Risk Mitigation.” Focus Note. Washington D.C.: CGAP

Advancing financial inclusion to improve the lives of the poor

www.cgap.org