Digital finance index shows progress in services - but not where consumers need it most

Digital financial services are fundamentally changing the way consumers manage, save, spend, and borrow money. In a fast-moving, innovation-driven sector, we can expect this to continue in the years ahead. 

So far, many of these innovations have been transformative, helping millions of people around the world to reap the benefits of financial inclusion, empowerment, and independence for the first time. However, digitalisation has also brought with it new and heightened risks for consumers. These include over-indebtedness, exposure to scams and fraud, data breaches, and more - with particular risk for low-income and vulnerable consumers. 

In 2022, at the Fair Digital Finance Forum, we unveiled our vision for fair digital finance: a world where digital financial services are inclusive, safe, data-protected and private, and sustainable. Since then, we have monitored the consumer experience of digital financial services in low- and middle-income countries, identifying gaps and tracking progress over time.

Key insights

Promising trends across the consumer protection frameworks and infrastructure

This year sees a promising rise in the overall index score from last year, from 41 to 48. The overall score rise is driven primarily by achievements in the development of digital financial service infrastructure and financial consumer protection frameworks.

However, progress is lagging where it matters most. The findings highlight gaps in financial resilience and fair customer outcomes, with poor scores related to lived experience and inclusivity. So although there have been regulatory and infrastructure improvements, these are not yet consistently translating into positive outcomes for consumers. 

The consumer voice remains muted

Progress in consumer protection frameworks is held back by a lack of engagement with consumer bodies. Over the past year, we have seen a notable increase in the proportion of consumer bodies that have never been engaged with by central banks and other financial regulators. Without engagement, the collective consumer voice cannot be captured in policy-making and regulation. 

Shifting mindsets towards a focus on consumer outcomes

The findings of the index point towards a need to shift mindsets to focus on consumer outcomes; assessing consumers' financial health and building a comprehensive understanding of consumer sentiment. This means going beyond tick-box compliance and complaints monitoring. A holistic framework is called for, as well as a concerted effort to build financial and digital literacy. This will empower consumers as users of digital financial services. 

Critically, transforming the consumer experience of digital financial services necessitates a joined-up effort among regulators, financial service providers, and consumer bodies. 

The Fair Digital Finance Accelerator

These insights are a contribution to the work of Consumers International's Fair Digital Finance Accelerator.

As evidenced by the index, consumer bodies play a vital role in shifting mindsets to focus on consumers' real financial lives. To help them take up the charge, the Accelerator brings together consumer associations in low- and middle-income countries. Through grants, training and thought leadership, it builds their capacity to connect with market players and regulators, and to reach and represent the collective consumer voice. 

To date, the Accelerator has trained over 90 consumer advocacy organisations and its efforts have reached more than 100,000 consumers through awareness and education initiatives. It has extended sub-grants to eight consumer bodies in seven countries to ramp up their work understanding and acting on consumer needs. 

To learn more visit Fair Digital Finance Accelerator

To join or support our vision, contact fdfa@consint.org.