FIW Recap: Grappling with Data Opportunities and Risks in Inclusive Finance

As the world races to stay on top of data-driven advances, inclusive finance leaders are particularly focused on how it will impact low-income and vulnerable populations. This post is part of a blog series highlighting FIW 2022 sessions that touch on CFI’s four strategic priorities.

A popart image created from a text description by Dall-E2.

In 2022, advances in artificial intelligence captured our collective imaginations in unprecedented ways. Whether it was the artistic text-to-image renderings of Dall-E2 shown in this blog post or in-depth conversations with ChatGPT, the implications of data advances in analysis, prediction, and generation became clearer than ever to the “non-techy” public. Last year, governments around the world raced to stay on top of data advances through various data governance approaches, such as data protection legislation, or draft approaches to regulating AI including the White House’s AI Bill of Rights and the EU’s AI Act. What has become very clear is that there is both tremendous excitement at the promise of these advances, as well as significant concern.

Several sessions at Financial Inclusion Week (FIW) 2022 focused on data-driven advances in inclusive finance that grappled with the duality of exciting opportunity and concerning risk – particularly with regards to low-income and vulnerable consumers, like female-owned MSEs and migrants.

Data Opportunities

A few sessions shared how customer data is helping to shape product design for traditionally underserved consumers. The UN Capital Development Fund hosted a session on Driving Women’s Financial Inclusion and Resilience, with a focus on how consumer data, whether administrative or survey based, can drive innovative financial products for women. In this session, a speaker from IME Nepal talked about how the company is leveraging remittance transaction data during COVID to better understand consumers and expand its digital offerings, including a wallet. UNCDF highlighted demand-side research that showed the challenges women face in onboarding to digital remittance services. My colleague Anindita Chakraborty contributed to the discussion with insights from CFI’s research on the difficulties female-led MSEs faced during the pandemic, and how that data should inform products to help MSEs be more resilient in future shocks.

Customer data is helping to shape product design for traditionally underserved consumers.

In addition to leveraging consumer data, looking at data on a larger scale can have significant benefits. In a short session by Principal Financial Group, the Principal team shared the launch of the Global Financial Inclusion Index, a ranking of 42 markets based on what governments, financial systems, and businesses are doing to advance financial inclusion for their populations. This index aims to give investors insights into the strength and resilience of these markets.

Several fintechs and providers shared insights on their data-driven business models. A session hosted by Korean fintech giant SentBe presented how its cross-border money transfer services leverage data on traditionally underserved consumers – including migrants from Bangladesh and Cambodia working in Korea – to provide customer-centric receipt options. Senegalese fintech LebFay presented its business model that uses an app and artificial intelligence-driven scoring model to lend to traditionally underserved MSEs and tradesmen. And, Imbita Swaziland Women’s Finance Trust spoke about the digitalization journey in offering its savings and credit cooperative society (SACCO) members a USSD-based platform to save, borrow, and make mobile payments.

Data Risks

Challenges, including privacy, bias, and other human rights issues, can stem from the exponential growth of digital lending.

At the same time, several sessions highlighted the risks around data-driven innovation and what inclusive finance stakeholders need to do about it. Aapti Institute, an India-based think-tank that conducts research at the intersection of technology and digital rights, hosted a session on AI and Financial Inclusion, discussing risks and opportunities for risk mitigation with representatives from Dvara, RBI Innovation Hub, and UNDP. This session raised challenges, including privacy, bias, and other human rights issues, that could stem from the exponential growth of digital lending in India. I was honored to moderate a session on the Potential of Privacy by Design for Inclusive Finance with inputs from PayPal, Mozilla Foundation, and the Digital Financial Services Association of Kenya. Representatives from PayPal and Mozilla discussed how Privacy by Design has been implemented in their business models, and Kevin Mutiso of DFSAK shared how startup fintechs can integrate and benefit from strong privacy practices.

Looking Ahead

As we look ahead to 2023, CFI will be monitoring how advances in AI are integrated into the inclusive finance space. Will there be chatbots or financial capability curricula that use ChatGPT? We’ll also be watching for countries to codify the use of AI and enforce data protection legislation. With so much happening in this space at the moment, there is a lot to pay attention to as we continue to grapple with the duality of data opportunities and risks.

View the full Data Risks & Opportunities Playlist from FIW 2022.

Financial Inclusion Week 2022 had over 3,300 registered participants from 2,000 organizations across 148 countries. With almost 400 speakers and 125 sessions, FIW 2022 was the largest event to date. All sessions from FIW 2022 can be viewed here.

And be sure to save the date for FIW 2023 which will take place October 16-19, 2023.

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