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> Posted by Loretta Michaels, Partner, HMS Wireless Consulting

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process, and highlights findings from “Mapping the Invisible Market.”

A good webinar yields more questions than there is time to answer, and the Financial Inclusion 2020 launch webinar was a case in point. Participants asked some excellent questions we couldn’t address during the webinar, so we are now following up on some of the questions about technology. For answers, we turned to Loretta Michaels, who facilitates our FI2020 Technology Working Group.

Q: Andrew Pospielovsky (Egypt): Clearly technology will dramatically increase access to financial services, and this process of technological development is self-sustaining even without funder intervention. I believe the real challenge for development agencies and regulators is protecting the bottom of the pyramid from technology being exploited by predatory practitioners (such as payday lenders charging four and five digit effective interest rates). How can we tackle this challenge?  

A: You bring up an important point that connects to FI2020’s focus on quality, not just access. CFI believes that advances in financial inclusion need to go hand-in-hand with adequate protections. In my experience, while there will always be “predatory practitioners,” new technologies help reduce the opportunity for fraud and exploitation by providing an electronic record of all transactions, automatic rather than arbitrary calculations of interest rates and charges, and greater overall accountability compared to manual operations today.

Technology per se will not solve all problems out there, but it does provide tools that make it easier to prevent and resolve the issues that come up. Many of the broader responses to predatory practices remain the same whether there’s technology involved or not: user literacy and education, training, proper oversight and regulation, and greater transparency.

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