Digital Financial Services Risk Assessment for Microfinance Institutions: A Pocket Guide

This toolkit aims to assist MFIs to understand the risks and corresponding mitigation strategies associated with digital financial services (DFS) in general, and with the diverse business models available for providing these services. It acts as a condensed and accessible resource for MFIs and provides quick looks into major risks related to digital transactions that most MFIs would face in their daily operations. It highlights both medium- and long-term threats and helps identify and gauge both the likelihood and potential negative impacts of each risk. The risks are presented in easy-to-read tables and figures for a quick reference on whether DFS is an appropriate fit for an institution or not. It also aims at helping MFIs in being successful in their DFS delivery. It also summarizes issues and lessons learned from MFIs that have implemented DFS. The toolkit provides guidance on the following:

• Identifying risks quickly and uniformly;
• Assessing an institution’s exposure to various risks;
• Selecting consistent mitigation strategies to lessen the exposure to these risks;
• Developing and offering DFS products to clients, while minimizing associated risks;
• Protecting clients and institutions.