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> Posted by Kyle Burgess, Executive Director and Editor in Chief, Consumers Research

From cash to digital currency

Image Credit: FamZoo Staff. No alterations made. CC BY-SA 2.0

Digital currencies, such as Bitcoin and its underlying blockchain protocol, introduce a technical platform for a new global payment infrastructure that has the potential to level the playing field for the 2.5 billion people across the globe who are unbanked or underbanked. The immutable and distributed nature of digital currencies and a number of the platforms built on top of blockchain protocols can provide improved security, efficiency, affordability, privacy, and transparency in financial transactions, as well as a whole host of other transfers of value or information. Furthermore, thanks to the proliferation of mobile devices, blockchain-based digital currencies can even remove the middleman, and serve as a bank in your pocket. However, fully removing a third party intermediary comes with significant risks, as there’s no one to call if you lose your private key (which functions as your password), break your hardware wallet (which acts as your digital vault), or want to dispute a payment because the goods you purchased are damaged (because digital currency transactions are irreversible). Like any other product, consumer protection must be at the forefront of the development and implementation of digital currency and blockchain-based financial services.

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> Posted by Tess Johnson, Project Associate, CFI

Farmer standing in green field and using touch screen mobile phone.

Photo credit: Xavier Arnau

Despite the excitement about moving mobile financial services (MFS) to a richer smartphone-based environment, we still have a long way to go before many customers at the base of the pyramid can reap the full benefits of these technologies. CFI Fellow Leon Perlman diligently identified many of the key obstacles for more inclusive MFS, including the lack of infrastructure to support the higher-speed mobile connectivity critical for MFS transactions; the plethora of substandard and/or cost-prohibitive smartphones in developing countries; and pervasive security vulnerabilities that threaten MFS transactions, to name a few.

There are some bright spots in Leon’s report, however, and we think it’s important to acknowledge them.

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> Posted by Sonja Kelly, Director of Research, CFI

The role of data is increasingly crucial as the financial services industry shifts to digital delivery, alternative analytics, targeted marketing, and data-driven customer segmentation. As outlined in the recent Accion report, Unlocking the Promise of Big Data to Promote Financial Inclusion, the future of financial inclusion will include higher volumes of better quality and more wide-ranging data to expand access, lower prices, reduce bias, and drive innovation. However, the use of big and alternative data in financial inclusion is not a value-neutral trend—nor should it be.

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Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.