New report: How consumer organisations can maximise their impact in digital finance policy

• New report: How consumer organisations can maximise their impact in digital finance policy
• News
• Blog
• Publications
• Media

As financial technology rapidly evolves, and regulators race to keep up, an ever more complex web of policy instruments and actors within the digital finance policy space is formed. Within this web there are gaps, overlaps, and hidden threats - leaving consumers, all of us, at risk of harm.

Consumer organisations can be a linchpin within an inclusive and protected financial services eco-system. They provide essential support to to people in the marketplace, from advice on how to seek redress, to education on consumer rights within digital financial services. They are often trusted pillars within their communities, and are uniquely placed to collect consumer data essential to evidence-based policy-making. The lack of an established legal and regulatory framework presents challenges, yet offers an exciting opportunity for consumer organisations to deeply integrate themselves within the policy-making process.

But with thinly stretched resources and unstable funding, many find it difficult to engage regulators and policy-makers. When we speak to our Members - consumer organisations based in over 100 countries around the world - they repeatedly tell us that they feel held back from improving financial consumer protection.

Today, we launch a new report - 'Maximising consumer voices in digital financial services policy-making: Consumer organisations' engagement strategies'.

At a glance

• For digital financial services to have significant economic and societal benefits, they need to be promoted in an environment that is fair for consumers.
• As the digital finance policy-making space evolves, it is becoming increasingly challenging for consumer organisations in low- and middle-income countries to navigate the complex policy space around them.
• Consumer organisations should aim to leverage the structures and processes of state interventions into digital financial services by fostering institutional arrangements that integrate consumers' perspectives.
• Consumer organisations are uniquely placed to support and advise on digital finance issues. They should build on their existing strengths, such as relationships with government and other stakeholders, access to original consumer-focussed data, and more.

Guidelines for maximising the consumer voice in digital finance policy-making

This report is a guide for consumer organisations in low- and middle-income countries to maximise their impact on digital financial services policy-making. Building on interviews with Consumers International Members, it showcasesthe advocacy strategies of consumer associations worldwide.

These guidelines have been specifically designed to support consumer associations in low- and middle-income countries. But with the digital financial services space continually evolving, they will also provide useful reading for those in high-income countries struggling to gain a foothold.

1. Build on existing foundations

When looking at how to influence the digital financial services space, consumer organisationsshould look at how they can build on their existing networks, expertiseand skills.

For example, in Rwanda,ADECOR has more than 30 consumer ambassadors or consumer representatives in each district helping with field research, data collection, awareness campaigns, consumer complaint management and other related activities. They have used this expertise and connections to research levels of fraud consumers have experienced in digital financial services in seven districts across the country.

2. Foster institutional structures and processes

Consumer organisationsshould supportthe creation of stable institutional foundations for digital financial services policy-making structures and processes. Because such institutions are still fluid in the digital financial services space, this is where consumer organisationscan build an impact, positioning themselves as dependable, valuedand essential partners within these structures.

3. Provide an essential source of original consumer data

Due to the newness of the field, many consumer challenges regarding digital financial services have not yet been clearly documented. Consumer associations can fill this gap. Tools like a well-functioning consumer complaint management system can be a unique data source. Low-cost options include 'consumer listening' through social media monitoring.

For example, between 2006 and 2010, Korea saw a widespread mis-selling scandal in which credit card companies sold add-on products to millions of consumers via mobile and telemarketing. Consumers Korea investigated internet blogs and portals (such as Naver) to identify flaws in the nation's financial consumer redress system, proposing ways of improving the nation's financial consumer redress system to policy-makers.

4. Leverage relationships

In the short term, building a team of experts working exclusively on digital finance will be difficult for many organisations. Consumer associations should supplement their existing expertiseby focusing on strategic partnerships with civil society, academic institutions, industryand other stakeholders.

5. Focus on initiatives for vulnerable consumers

Digital financial services have the potential to offer real benefits for vulnerable consumers, but financial inclusion will be tempered if advances are not accompanied by strong consumer protection. Consumer organisationsare often already serving underprivileged populations in their regions - and are trusted advisors on issues like cost-of-living, energy, food, and product safety.

For example, CUTS (India) work in partnership with the government toenhance the digital financialliteracy of women consumers