Better access to formal financial services thanks to digital technologies has improved lives but brought new risks, such as over-indebtedness. Better consumer protection is needed.
Digital technologies such as mobile money make it easier to provide financial services to previously excluded communities. But new products entail new risks, so better inclusion needs to come with better protection, UNCTAD Secretary-General Mukhisa Kituyi has said in Geneva at the opening of a two-day global meeting on consumer protection.
With about half of working-age adults excluded from formal financial services, such as a bank account, better access can improve livelihoods and boost the economy, especially in developing countries, where up to 98% of the population is “unbanked”.
For example, studies have shown that Kenyan families with access to mobile money transfer services can face shocks such as severe illness or livestock death without reducing household consumption, compared to a 7% drop for families without access to similar services.