Fintech has allowed for greater access to financial services, but utilisation continues to lag behind access. Market operators have to provide products beyond mobile money, but new products, such as mobile credit and insurance, remain under-developed, and utilisation of mobile money for retail purchases has not benefited the poorest.
The absence of digital identification (e-KYC), low financial literacy, and credit risks are some bottlenecks to utilisation. In order to improve utilisation, regulators and market operators have to push for cost-effective universal identification, leveraging digitisation as an enabling tool. This has to be coupled with financial education efforts and the creation of user-friendly credit and insurance products for consumers with low financial literacy. For instance, credit providers could devise better repayment regimes that are more intuitive for customers, and insurance providers could offer products that hedge against weather-related risks in smallholder agriculture.
We also have to be wary of existential risks to the system: without a successful fintech ecosystem, it is difficult to grow utilisation for the poor. Cybercrime presents the biggest risk to confidence in the fintech sector. Unsurprisingly, cyber security is now high on the agenda of regulators and providers, and is key to consumer protection. Sustained growth in the utilisation of fintech products will require enhanced capacity to prevent such crime, and the ability to deal with it quickly and fairly when security breaches occur. There is room for regulators and adjudicators to step up into this space.