Consumers International
- | April 23, 2024
Digitalisation has transformed how we access our finance and the way we interact with those providing the services. In a post-Covid world, 57% of adults in developing economies now make or receive digital payments (an increase of 23% from 2014) and two-thirds of adults worldwide use digital payments. For people’s everyday lives, this means quicker transactions, improved access to essential products, and reduced travel time to withdraw and pay in cash. But in a relatively novel sector, consumers face a number of frustrations which impact their experience of digital financial services – such as system glitches, inappropriate design, fraud, cybercrime, data breaches, opaque pricing, and more.
The sector has a long way to go before our consumer vision of inclusive, safe, data protected and private, and sustainable services is realised. For this to happen, the consumer voice must be heard.
Our latest report – Digital finance: The consumer experience, 2023 – provides an assessment of the scale of the issue across low- and middle-income countries. In evaluating the pain points facing consumers, it provides a much-needed route map for regulators, consumer associations, and market actors to take action. Assessed across four ‘pillars’ of financial consumer protection, the total index score comes in at just 40 out of 100. These results make it clear that more work is needed to build consumer protection frameworks that sufficiently protect and empower consumers.
READ THE REPORT
What differences can be seen between economies?
Developing this tool has allowed us to take an interesting look at how different countries compare. Countries were categorised into three tiers, ‘advanced’, ‘transitioner’ and ‘emerging’.
Advanced and transitioner countries perform better due to having stronger protection frameworks and established independent recourse mechanisms and complaints systems in place. Meanwhile, ’emerging’ countries are lagging significantly behind in building strong financial consumer protection frameworks. Interestingly, the results showed limited variation between clusters on the inclusion and protection playing field pillar – which saw relatively high scores across all three tiers. This could be explained by the uptake of mobile money across low- and middle-income countries. In the years to come, annual instalments of this report will gather more data on remaining user frustrations allowing us to make deeper assertions on variation across countries.
Right now, we need a concerted effort to build consumer-level and system-level resilience to risk. The report lays out a call to action for decision-makers at the global and national level:
Consumers International will build these findings into the work of our Fair Digital Finance Accelerator – equipping market actors and others to heed our call to action and to ensure that consumer associations are actively involved. Over the next year we will also bring sustainability issues firmly to the digital finance agenda, exploring the massive opportunity for reaching climate goals and demystifying what sustainability in digital finance means in practice.
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