Consumers international launches global campaign for transparent digital finance
Billions of consumers around the world use digital financial services. Payments are made in a matter of moments. Emergency loans taken out in just a few clicks. And millions of people – formerly unbanked – are interacting with financial institutions for the first time via mobile money.
The digitalisation of financial services presents a unique chance to build better services for consumers. Seizing this opportunity will give consumers greater control over their financial wellbeing, businesses a better understanding of consumer needs, and will help to deliver safe, effective and resilient digital markets for all.
At present, this opportunity is being missed – especially when it comes to transparency. Our Members around the world are increasingly concerned that opaque, misleading and inaccessible information in digital finance is causing harm to consumers.
Today, we launch a global campaign for transparent digital finance for consumers. This has begun with an alliance of 30+ digital finance experts (and counting), who call for urgent action to improve consumer understanding and trust in digital finance services through greater transparency.
Consumers need relevant, timely, and inclusive information to make informed decisions and be better protected from harm.
READ OUR MULTISTAKEHOLDER CALL-TO-ACTION
Our call is to all actors in the digital finance ecosystem to take urgent action to improve consumer understanding and trust, through greater transparency and accountability. Each must play their part to review existing transparency practices, set goals and deliver innovative solutions that will reduce harm and unlock the potential benefits of digital finance for all consumers.
Contact impact@consint.org to to join our call.
The problem: Opaque, misleading and inaccessible information.
Poor transparency is a persistent problem in financial services – and is being exacerbated by digitalisation. In part this is due to the nature of new digital interfaces – it’s hard to read lengthy terms and conditions on a tiny phone screen. But in some cases, this is by design. Key terms and important facts buried beneath multiple clicks, confusing payment terms which hide heavy charges, and deceptive website design 'nudging' consumers towards more expensive services, or ‘steering’ them away from options to cancel or seek redress.
How does poor transparency lead to harm?
Our statement draws a link between opaque, misleading, and inaccessible information in digital finance and a negative impact on consumers which can lead to harm.
For example, complicated terms and conditions make it difficult to fully understand late payment charges, or the cumulative effect of high interest rates. Consumers find themselves trapped under payment plans they cannot afford.
Elsewhere, low fees can be used to hide poor exchange rates. This can have a significant impact on those with tight budgets – and there are rarely routes to redress for those affected. In 2021, consumers and businesses worldwide lost $187 billion to hidden fees on exchange rates when making cross-border transactions.
More broadly, a lack of transparency is a primary contributor to the widespread lack of trust in digital finance. This holds us back from building consumer confidence and unlocking the full benefits of digital finance.
In 2023, 57% of consumer bodies cited ‘lack of transparency in fees and charges’ as a significant factor causing lack of trust.
Our campaign: A call to all digital finance actors
We call for actors in the digital finance ecosystem to take urgent action to improve consumer understanding and trust through greater transparency and accountability.
But what exactly do we mean by ‘transparency’? Transparency is not just about full disclosure. It means providing information that is genuinely helpful to consumers, enabling them to make information choices that support their financial wellbeing
We define transparency as providing information to consumers in a way that is relevant, timely and inclusive. This means honest, accurate information, provided to the consumer when they need it, and presented in a way they can understand.
Digital finance providers must take responsibility for improving the quality and transparency of their communications. And around them – regulators, civil society, consumer bodies, must play their part to review existing transparency practices, set goals and deliver innovative solutions that will reduce harm and unlock potential benefits of digital finance for all consumers.
Join us
So far, over 30 change-making organisations and institutions have joined our campaign.
If you are a government or regulatory body, consumer association, civil society or intergovernmental organisation, committed to making transparency a reality in digital finance, join our alliance. Email impact@consint.org to become a signatory and receive our campaign materials.