In financial services, data is the key that can unlock access to a full range of personalized, effective products that can help low-income people achieve their goals. There are significant risks, however: many low and middle-income countries have no effective consumer data protection regimes in place and that even where those exist, people with low levels of digital and financial sophistication may, in their eagerness to receive financial services, sign away their rights without even fully understanding them.
CFI’s work in this area — part of our four-pronged strategy for advancing inclusive finance — focuses on means to bring transparency to the data practices of digital financial service providers. We study how financial service providers use algorithms and what must be done to protect already-underserved populations against algorithmic bias in automated decision-making. We also monitor emerging data privacy and protection frameworks around the world to document what does and does not work to advance financial inclusion while safeguarding data privacy, portability, and other consumer rights.
- Regulators and supervisors believe in a balanced, risk-based approach to assessing data risks.
- Investors believe that responsible data practices are in their interest as much as in the interest of customers.
- Donors invest in evidence-based solutions that support responsible data practices and support the capacity building of market actors (clients, providers, investors, regulators).