#FintechProtects: Keeping Clients First in Digital Finance

> Posted by the Smart Campaign

The financial technology revolution is well underway. Whether it’s a client-facing innovation like using your phone to pay a friend, or behind-the-scenes updates like improved CRM solutions at your financial institution, your money management is being affected by the influx of fintech. And this is good news. But with these new business models, services, and providers, there are also new risks to clients. Agent banking is widely prevalent in many parts of the world, for example, but are these new agents offering adequate disclosure in terms of the prices of their services? Or in the case of online credit, these providers might have pleasing, interactive websites, but are they transparently communicating their fees or instead obscuring terms, hiding penalties or the implications of default?

The Smart Campaign, along with the advent of fintech, has widened its focus to encompass the full landscape of products serving the base of the economic pyramid. Just as a microfinance client deserves to be treated with adequate care by their provider, so too does a client whose lender exists solely online (or in their phone). In light of this pivot, we invite everyone to join us in a new mini-campaign called #FintechProtects.

#FintechProtects will take place over the next four weeks, where we’ll work to raise awareness of the importance of responsible digital financial services (DFS), spotlight related work from the Smart Campaign and others, and engage with industry actors on how fintech can move forward in a way that’s best for clients.

How can you get involved?

  • Follow along here on the CFI blog and via CFI and Smart Campaign social media channels as we’ll be regularly sharing content related to #FintechProtects.
  • Share your / your organization’s own content using #FintechProtects! We’ll be closely monitoring Facebook and Twitter and re-sharing as we go along. Or, if you’d rather us do the sharing, feel free to email us content to post.
  • Endorse the Smart Campaign. Endorsing the Smart Campaign signifies your commitment to the client protection principles, which reflect a widespread common agreement of what constitutes fair treatment and reflect observed incidence and risk of harm for clients. To date, the Campaign has received over 4,600 endorsements, including 1,674 from microfinance institutions and 187 from investors and donors. Our hope is that #FintechProtects will help spread the word on the importance of client treatment in DFS and more actors in this space – technology providers, telcos, commercial banks, regulators, and investors, to name a few – will take the first step in endorsing the Campaign, and work towards ensuring that their clients are treated fairly.

Stay tuned over the days and weeks ahead for more. In the meantime, check out a few blog posts and a few papers from the Smart Campaign on our work in responsible DFS:

eCPPs: How a Principles Approach to Client Protection Is Built for the Digital Age (Blog Post) – The Campaign details its work with Accion’s Channels and Technology Team in mapping out the emerging risks to clients associated with DFS and how they align with the framework of the client protection principles.

Exploring Responsible Agent Management in India (Blog Post) – The Campaign shares its early learnings from a mystery shopping study conducted with Accion’s Channels and Technology Team to uncover and understand the client protection risks in the provision of financial services at agent network outlets.

Digital Financial Services and Microfinance: State of Play (Paper) – The Campaign along with Accion’s Channels and Technology Team wrote a framing note to inform the evolution of the client protection standards. The paper offers a deep dive into the intersection of DFS and microfinance institutions, analyzing the risks that DFS pose to MFI clients, especially those served by mobile banking.

Potential Risks to Clients When Using Digital Financial Services (Paper) – The Campaign, in collaboration with Accion’s Channels and Technology Team, analyzes the potential risks to clients in using DFS by involving all the variety of typical actors of the ecosystem in the analysis, exploring evidence of those risks in implementations, and recommending actions to mitigate those risks and minimize harm to clients.