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Digital finance presents opportunities/risk to vulnerable groups – Consumer Advocacy Centre Ghana

Accra, Mar 27, GNA – Digital finance presents both opportunities and risks to vulnerable groups, Consumer Advocacy Centre Ghana, has reiterated.

A statement signed by Professor Goski Alabi, President, Consumer Advocacy Centre Ghana and copied to the Ghana News Agency, said digital finance brings new opportunities – but also new risks that could lead to unfair outcomes for consumers.

It noted that this year’s World Consumer Rights Day, March 15, 2022, sparked the first-ever global conversation on the consumer vision for fair digital finance as it was the for the Day: Fair Digital Finance.

It said digital technologies were reshaping payments, lending, insurance and wealth management, becoming a key enabler for consumers of financial services.

The statement indicated that however, in recent years and exacerbated by the COVID -19 pandemic, consumers were increasingly exposed to scams, frauds, phishing and data malpractices, Consumers who experience economic hardship were particularly vulnerable to these harms.

It said to address the most pressing issues faced by consumers in digital finance, Consumers International and their global Membership developed a Consumer Vision for Fair Digital Finance.

It said the Vision sets out questions for decision-makers from a consumer rights perspective to build a digital financial marketplace that is inclusive, safe, data protected and private, and sustainable for everyone.

The statement said finance experts had estimated that by 2024, digital banking consumers are expected to exceed 3.6 billion.

It said in the developing world, the proportion of account owners sending and receiving payments digitally has grown exponentially.

“For instance in Ghana, the number of mobile phone money accounts increased by 18.49 per cent to 38,473,724 at end of December 2020 from the 2019 position of 32,470.793, according to Payment Systems Oversight Annual Report, 2020 issued by the Bank of Ghana.”

The statement said digital finance could increase the likelihood that the most vulnerable are left behind.

It said digital Financial Services could empower consumers, everywhere; adding that to achieve this, digital financial services must be inclusive, safe, data protected and private, and sustainable.

It said building financial inclusion and resilience are vital for thriving communities and economies.

“We want digital finance products and services that help us alleviate poverty, avoid debt, create jobs, grow health and wealth and help us plan for the future in a sustainable way,” it stated.

“Digital finance services can help in many ways. But it will take effort.”

The statement said to maximise the benefits and prevent consumers from being harmed, consumer associations such as Ghana’s, the Consumer Advocacy Centre Ghana, the Government, industry and civil society organisations must work together to create a fair, safe and sustainable marketplace for all.

It said globally, financial regulatory frameworks have been designed to deal with the presence of digital technologies, however, many still lacked consumer protection mechanisms and supervision and enforcement capacity.

It noted that equally, some providers of digital finance were ignoring the needs of consumers and actively leaving them exposed to vulnerabilities.

It said the use of technology and the possibility of a cashless society created new risks and deepened existence within the financial services sector.

The statement said technology was vulnerable to hackers and illegal actors creating substantial risks to security and privacy.

It said frauds and frauds were increasing; declaring that consumers risked not just loss of money, but the loss of personal and biometric data too, which could never be recovered.

It said digital inclusion was increasingly a precondition for financial inclusion, for example, the Ghana Card had become a prerequisite for banking transactions.

The statement said global gaps in connectivity impeded broad-based access to digital tools and personal computers and mobile phones had replaced the bank branch, but assumed networks and devices were both available and affordable.

It said low digital and financial literacy was common and unequally spread across generations; adding that the factors were creating and exacerbating digital divides.

It said digital finance had the potential to transform the livelihoods of consumers if it was supported by effective consumer protection frameworks that existed alongside cash-based payment options. The statement said building well designed digital financial services and infrastructure could offer safe and innovative ways to engage with financial services and improve financial health.

It said digital finance products and services could increase understanding of consumer experience and thereby accelerated inclusion.

It said digital transactions could create digital footprints and new ways to define creditworthiness, widening access to loans, if used fairly and with effective oversight and personalised services could give people more visibility and control over their money and help build resilience, while automated savings could help people save with ease.

It intimated that certain platform services give rise to more accessible investments, at lower costs and emerging financial technologies have provided a growing number of sustainably-minded digital financial services providers with the necessary tools to offer transparency to consumers on their sustainable consumption practices.

It noted that digital technologies would continue to reshape all forms of financial services, including payments, lending, insurance, and wealth management everywhere – a process that the COVID-19 pandemic had accelerated.

It said this Vision for Fair Digital Finance asks all stakeholders to play their part.

“Fair digital financial services need to be underpinned by consumer-centric policy and trustworthy systems.”

The statement said the design and delivery of products and services should be informed by consumers and their representatives.

“The digital finance ecosystem must deliver better value and create financial health and resilience for everyone, no matter where they are,” it said.

Source: Ghana News Agency

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