Emerging Risks to Consumer Protection in Branchless Banking: Key Findings from Colombia Case Study

This case study examines the problems with branchless banking and mobile financial services models that put consumers at risk in Colombia. It explores solutions to mitigate these risks while still encouraging innovation in the finances markets that serve the poor. Besides focus groups, the study is based on interviews with representatives of primary banks that offer digital financial services in Colombia, as well as regulators, industry associations, and an agent aggregator. The interviews were conducted between 28 July and 15 August 2014 with the purpose of uncovering new risks to clients from branchless banking and digital financial services, and to understand what providers and policy makers are doing to protect customers. Key highlights from paper include:

• Clients report that network outages are the most frequent problem they face in digital financial services;
• Clients are most concerned about the lack of clarity about where to complain;
• Despite difficulties in using digital financial services, Colombians are proactive about being vigilant and not being scammed;
• While temporary PINs may increase security, difficult-to-use interfaces obfuscate mobile financial products;
• Aligning agent and agent network managers’ incentives with a good customer experience has potential to reduce problems at the agent channel.