Data protection, analytics are key to empowering consumers & advancing financial inclusion

Following the productive Consumer Empowerment & Market Conduct (CEMC) and Financial Inclusion Data (FID) Working Group meetings, more than 80 AFI members attended a training on Consumer Empowerment & Data. Co-hosted by mastercard, the training discussed the role of data, and how the public and private sector can collaborate to enhance data privacy and protection — a theme relevant to both CEMC and FID Working Groups.

We’ve put together a list of top four highlights from the training. Read on below.        

1. The challenge with real-time payments in driving financial inclusion

As a result of the rapidly evolving legal and regulatory landscape across different regions, and the global trend towards data localization, it is becoming increasingly critical to incorporate data protection into financial products and services. However, it also becomes challenging to use personal data to prevent fraudulent activities.

A key concern in many legal jurisdictions is the sole dependence of an individual’s consent to allow payment issuers to use personal data in order to monitor, and detect potential fraudulent activity.

Regulators have an important role to ensure any enterprise that is interacting with payment systems and transactions, invests in data protection. The legitimate use of personal data for customer protection can be considered as an aspect of regulatory proportionality to as a means for fraud prevention and customer protection.  

2. “You can’t have a weak link anywhere.”

Anti-Money Laundering and Counter Terrorism Financing (AML/CFT) policies could be used to identify illegitimate transactions and curb fraudulent operations. Using a machine learning algorithm, private sector companies are collaborating with financial sector regulators to identify these types of transactions. Regulatory frameworks can be updated to be more responsive in order to safeguard the security of domestic payment systems. The catch? Additional consent on customer’s private data may be required to prevent these risks effectively.

Given existing customer protection mechanisms, initial steps could include monitoring entry points — accounts at a financial institution — and evaluate if the current threshold of US$10,000 is still a valid target or if it should be modified to track the volume of low-value transactions that accumulate into high balance accounts.

3. “Data is only good if you can act upon it.”

What can we derive from 2.3 billion global cards, and 52 billion transactions per year?

From huge volumes of numbers to actionable insights, data analytics hold untapped potential for policymakers to understand the market trends that can guide decision making and sustain an impact on policies.

4. Innovation in digital payment delivery channels drive micro and small businesses in Mexico

Public markets in Mexico City with a traditional cash-based economy were being abandoned and losing their business against big retailers. The Mexico City government requested a money payment issuer to modernize the payment channels of these popular retail markets.

The project was a success, increasing the economic growth of seven popular markets in Mexico City, and revealed additional hidden cost savings for retailers including an improvement in financial management, a decrease in employee fraudulent practices, and savings in risk money management. Since 2014 to the end of 2017, more than 20,000 accounts have been opened in 57 public markets in Mexico City.

Empowering consumers & policymakers

These four takeaways reflect the importance of data analytics for policymakers and financial literacy for consumers especially women, key insights that resulted from the CEMC and FID Working Group meetings this week. As we wrap up this week’s event, learn more about the high-level outcomes that came out of both Working Group meetings.


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