Please join the Project on Prosperity and Development, in partnership with USAID’s Innovation, Technology, and Research Hub (ITR/T) and DAI, for an event featuring a fireside chat, panel discussion, public Q&A, and networking lunch addressing the topic of designing financial products with consumer protection in mind.
The digital age has the potential to serve as a source of economic empowerment and increased agency for people across the world. Digital financial services have become transformative to individuals and MSMEs in supporting business transactions, sustaining livelihoods, and improving household-level resilience. The COVID-19 pandemic and associated lockdowns led many governments worldwide to adopt digital payments to make safety net transfers. Approximately 40 percent of adults in developing economies made a digital payment for the first time during the pandemic. Digitization also enabled a steep increase in financial account ownership. This trend has continued through the Covid-19 pandemic, with 76 percent of the global adult population now owning a financial account.
At the same time, digitalization has also heightened the scale of consumer protection risks and associated harms including online fraud, scams, and phishing attacks. Without the proper safeguards, sensitive personal data can be leaked. Algorithm bias present in AI technology may also risk magnifying gender-based inequalities, especially when applied to financial products such as savings and credit. In East Africa, for example, consumer advocates have taken stock of risks that can disproportionately affect low-income users and women. Moreover, some Covid- relief payment options did not offer accessible features or sound data practices to consumers. These risks are more pronounced for vulnerable communities that often do not possess the economic means, education, and assets to confront and mitigate these challenges. If unaddressed, these risks have the potential to undermine trust in digital finance and turn people to more informal methods of financing.
The global community has an opportunity to take action to mitigate risks and create opportunities for positive impact. In particular, these trends underscore the imperative for each stakeholder across the ecosystem to foster a more equitable and secure digital finance ecosystem. This includes strengthening consumer protection that incentivizes responsible market practices and developing financial products with a customer-centric lens.
This event was made possible through the generous support of USAID and DAI.
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