The use of data is rapidly shifting the limits of financial inclusion. For clients with no formal credit history, providers can now use alternative forms of data – from social media engagement to location tracking – to assess an individual’s creditworthiness. While these advances merit enthusiasm for their potential to break down access barriers, they raise new questions around data security and fraud, consumer consent, discrimination or price segmentation, and opaque privacy policies. These risks are especially acute for low-income individuals who often have low digital literacy and are less likely to understand or use basic privacy protections.
Financial Inclusion Week content around this theme discussed the healthy tension between data use and risks and steps we can take to ensure that the digital economy evolves in a way that advances inclusivity while putting appropriate safeguards in place.