Transparency: A core enabler of Trust and Empowerment in Digital Finance
More than 5 billion people around the world use digital payments. The rapid growth of digital financial services (DFS) has transformed the way millions of people, especially in low- and middle-income countries, access financial tools. While these services have the potential to enhance financial inclusion, they also pose significant risks for consumers if not delivered transparently.
This year's Financial Inclusion Week presents a timely opportunity to address transparency in digital finance. The themes of Designing for the Consumer and Safeguards in a Digital Age explore how to keep consumers at the centre of new financial products and how the inclusive finance sector can promote data transparency, protect vulnerable groups, and better support consumers. In 2023, 43% of consumer bodies identified the lack of transparency as a significant challenge in digital finance.
Six months into our global campaign for Transparent Digital Finance for Consumers, results show that transparency is more than just a regulatory demand. It’s a core element to building consumer trust, improving user experiences, and driving genuine financial inclusion.
From vision to reality: impactful achievements so far
In April 2024, our campaign for transparent digital finance gained support from over 50 stakeholders, including consumer organisations, regulators, international businesses and intergovernmental bodies – highlighting the urgent need for reform. Take action and join our alliance today.
Since launch, significant progress has been made across various nations to enhance transparency in financial services.
Here are some notable examples:
Uganda
Following consumer frustrations with data inconsistencies in Uganda, the Uganda Communication Commission (UCC) called for telecom operators and mobile money providers to be more transparent about their data usage practices. They asked for clearer communication of terms and conditions, along with better mechanisms for consumers to monitor their data. Airtel, one of the country’s top telecom providers, responded by rolling out initiatives to better inform consumers and improve engagement at the community level.
To protect consumers from predatory digital lending practices, the Uganda Microfinance Regulatory Authority (UMRA) is also enforcing new regulations. Predatory digital lending practices involve unethical behaviours such as charging high interest rates, misleading advertising, and aggressive debt collection. They often target vulnerable populations, trapping them in a cycle of debt and financial instability. These practices exploit consumers, making it difficult for them to escape economic hardship. The guidelines, developed with input from consumer groups, aim to ensure transparency and fairness in digital lending, benefiting millions of unbanked Ugandans.
Barbados
In the Caribbean, the Barbados Consumer Empowerment Network celebrated a win in their advocacy for transparency, fairness and inclusivity in financial services. The fragmented banking system in Barbados often results in inefficiencies, high fees and frustrations for consumers, including vulnerable groups. To combat this, the Central Bank of Barbados unveiled its new Market Conduct Guidelines for Commercial Banks. These guidelines ensure that terms, conditions, and fees are communicated clearly, aligning with the values championed by Consumers International’s campaign.
Cambodia
The National Bank of Cambodia is redrafting its corporate governance regulations to require all regulated financial service providers have a Board Client Protection Committee. This committee will focus on client-level transparency, fair collection practices, and grievance redressal, ensuring that consumer interests are considered at the governance level.
The Path Forward: Ensuring Transparency and Fairness
The progress made in six months for greater transparency underscores the importance of continued advocacy and reform – change is possible and impactful. The work being done by Consumers International, alongside our Members and global partners, is helping reshape the digital finance landscape to ensure that all consumers—especially the most vulnerable—are protected and empowered. Yet, the journey is far from over. Greater transparency remains critical for fostering trust, fairness, and financial inclusion.
As we move forward, continued advocacy for clear communication, strong data protection, and accessible redress mechanisms will be key. These efforts will ensure consumers can confidently navigate the digital financial landscape. The focus on transparency isn’t just about fairness; it’s about empowering consumers and ensuring they engage with services that are safe, secure, and equitable.
This work takes on even more significance during Financial Inclusion Week 2024, where global discussions focus on safeguarding consumer rights in the digital age. By ensuring transparency, we can build a digital financial future that truly serves everyone.
Learn more about our transparency campaign here and our work in digital finance here.