This document summarizes research on customer risks in digital finance and proposes solutions to mitigate those risks. It finds that while digital finance now serves over 300 million customers, many experience problems like network downtime, agent liquidity issues, complex interfaces, and fraud. The research identifies 7 key customer risk areas and provides examples of risks reported in various countries. It then proposes 5 priorities for industry to address through solutions like improving network reliability, simplifying interfaces, strengthening agent oversight, combating fraud, and improving complaint resolution. The goal is to increase trust in digital finance and improve the customer experience.

1. Doing Digital Finance Right:
The Case for Stronger Mitigation
of Customer Risks
3
Kate McKee
Michelle Kaffenberger
Jamie Zimmerman
29 June 2015

2. Which of the following were NOT reported by
DFS customers in our research?
1. A customer reports falling asleep
while waiting so long on hold with
customer service
2. An agent refuses to complete a
customer's transaction unless they
buy something from their store
3. In one village, every mobile money
customer has the exact same PIN
4. Customer receives a call saying they
won the lottery and requesting a
money transfer to “access” their
winnings
5. Agent lies to a customer about
liquidity in order to maximize
revenue
Acustomerreportsfalli..
Anagentrefusestoco...
Inonevillage,everymo...
Customerreceivesacal...
Agentliestoacustome...
25%
19%
13%
8%
35%

3. The state of DFS
250 offerings serving 300 million customers
However…
2/3 inactive
globally
OTC
dominates
many markets

4. 6
Risk perceptions & experiences
Lower uptake
Higher inactivity
Preference for OTC over mobile wallets
Examples
Uganda: network unreliability = limited uptake
Tanzania: poor recourse = inactivity
Bangladesh: confusing interface = OTC

5. Evidence of Customer Risks
7
Russia
Pakistan
India
Bangladesh
The Philippines
Indonesia
Haiti Uganda
Colombia Côte d’Ivoire Kenya
Peru Ghana Rwanda
Nigeria Tanzania
Countries with evidence from consumer research

6. 7 Customer Risk Areas
8
1. Inability to transact due to network downtime
2. Insufficient agent liquidity or float
3. User interfaces that many find complex and
confusing
4. Poor customer recourse
5. Nontransparent fees and other terms
6. Fraud that targets customers
7. Inadequate data privacy and protection

7. 9
1. Inability to transact due to network downtime
% of users who have experienced network downtime
39%
52%
36% 38%
59%
Ghana Kenya Rwanda Tanzania Uganda
“What you do is you leave the agent with the
money and they send it when the network is back
so all you have to do is just call them to confirm
that it has been sent.” Rural woman, Uganda
InterMedia 2015

8. 10
2. Insufficient agent liquidity or float
% of users unable to transact because of insufficient agent liquidity
InterMedia 2015
22%
55%
23%
32%
37%
Ghana Kenya Rwanda Tanzania Uganda
14% transactions
denied per day in
Tanzania
10% transactions
denied per day in
Uganda

9. 11
3. Complex and confusing user interface
Difficulties operating services
Keystroke errors
Assisted transactions
“My sister always withdraws and brings the
money for me… She tries to teach me, but I’m
scared with all those buttons of messing up and
losing money.” Woman, Colombia
Source: CGAP

10. 4. Inadequate provider recourse
12
Unclear, costly, and time-consuming
procedures
Often turn to agents
Particularly problematic for G2P
recipients
“…I waited for three days for them to answer my
complaint but I [never got it resolved]. This
experience led me to worry: what if it happens
when I’m paying my bills?” Male, Colombia
Source: CGAP

11. 13
5. Nontransparency of fees and other terms
Incomplete understanding of
prices, terms and conditions
More vulnerable to agent
misconduct and price fraud
Start Balance: 21,471
Bill Pay Amount: 7,644
Expected New Balance: 13,827
Actual New Balance: 13,810
Implicit Transaction Cost: 17

12. 14
6. Fraud perpetrated on the customer
Employee fraud
External fraudsters
Agents
Fraud is “the intentional and deliberate
action undertaken by players in the DFS
ecosystem aimed at deriving gain (cash or
e-money) and/or denying other players
revenue and/or damaging the reputation of
other stakeholders.” (Mudiri 2012)
Source: CGAP

13. 15
7. Data privacy and protection
Inadequate data protection
Poor understanding of new data uses
Unforeseen outcomes
Source: CGAP

14. 16

15. Which of the following would have the biggest
impact on mitigating customer risks in DFS?
1. Conduct regular network
system testing and
monitoring
2. Redesign interfaces to reduce
keystroke errors
3. Strengthen agent
management and oversight
4. Make customers aware of
phishing, fraudulent calls and
messages, and ID spoofing
5. Create systemized and
monitored complaint
resolution management
Conductregularnetw
ork...
Redesign
interfacesto
re...
Strengthen
agentm
ana...
M
ake
custom
ersaw
are
o...
Create
system
ized
and
m
...
8%
18%
36%
4%
34%

16. How strong is the provider business case to invest in this
solution?
1. No way they’ll do it
2. They’ll do it …if the
regulator makes them
3. I think they’ll see the
value in this
4. They’d be crazy not to
5. I need to see the cost-
benefit analysis before
I can answer this
18
N
o
w
ay
they’lldo
it
They’lldo
it…
ifthe
regul...
Ithink
they’llsee
the
valu...
They’d
be
crazy
notto
Ineed
to
see
the
cost-ben...
4%
40%
29%
6%
20%

17. 19
Provider Solutions
Haiti Chad Uganda
Colombia Côte d’Ivoire Kenya
Ghana
Nigeria Tanzania
Zimbabwe
South Africa
China
Pakistan
India
Bangladesh
Countries with exemplary provider solutionsCountries with evidence

18. 20
5 Priorities for Industry to Identify, Test, and
Scale Solutions
1. Improve service reliability and robustness
2. Make the customer interface more user-
friendly
3. Strengthen agent quality, management,
and liquidity
4. Combat customer-affecting fraud
5. Improve handling of complaints, queries,
and redress

19. 21
1. Improve service reliability and robustness
Regular network system testing and
monitoring
Reliable platform that integrates
smoothly with other ecosystem players
Ensure adequate bandwidth allocation and
more practical USSD session time-outs
Source: CGAP

20. 22
2. Make the customer interface more user-friendly
Source: CGAP
Offer the menu in local languages
Reduce USSD timeouts by extending
sessions
Add ”check digits” that prevent sending
money to a wrong number
Redesign interfaces, make them more intuitive
and navigable, to reduce keystroke errors

21. 23
3. Strengthen agent quality, management and liquidity
Improve quality and cost-effectiveness of
training
Strengthen float and liquidity
management model
Strengthen agent management and
oversight
Introduce and enforce graduated agent
sanctions for compliance violations
Source: CGAP

22. 24
4. Combat customer-affecting fraud
Make customers aware of phishing, fraudulent
calls and messages or ID spoofing
Prevent SIM-swap related scam
Improve data handling for prevention and
data analytics for detection of fraud
Ensure agents are incentivized for ethical
conduct and high service quality
Source: Fraud-Vigilance Kenya

23. 25
5. Improve handling of complaints, queries & redress
Equip and train agents to help address
problems
Provide a call center and ensure
designated and specialized staff
Ensure systemized and monitored
complaint resolution management
Source: CGAP

25. What is the Financial Times headline that you
most fear?
1. Failure of PaymenTopia leaves
millions of Freedonia pensioners
in limbo.
2. Massive All-In-Pay data breach
results in $15 billion loss and
government query.
3. Cleaned-out ReadiBank accounts
traced to malware on App.
4. 98% of Diwanese m-insurance
clients unaware of their policy &
terms.
5. Insta-credit borrowers
demonstrate in streets as
580,000 defaults reported.
27
Failure
ofPaym
enTopia
l...
M
assive
All-In-Pay
data
b...
Cleaned-outReadiBank
...
98%
ofDiw
anese
m
-insu...
Insta-creditborrow
ers...
25%
37%
16%
5%
18%

26. 29
Kate McKee kmckee@worldbank.org
Michelle Kaffenberger michelle.kaffenberger@gmail.com
Jamie Zimmerman jamiezimmerman@gmail.com
Thank you for your attention

27. 30
Advancing financial inclusion to improve the lives of the poor
www.cgap.org