Consumer Protection at the Bottom of the Pyramid (BOP): Striking the Right Balance between Access, Protection and Innovation
This presentation analyzes consumer protection issues at the Bottom of the Pyramid (BOP). The market at the BOP is different because clients have lower levels of income, assets, education and limited experience with formal providers and products. Branchless banking is a low-cost transaction channel that uses existing retailers and technology. Experience with branchless banking has demonstrated its potential to extend access to those currently unserved, by driving down costs. Consumer protection issues in branchless banking include the need for:
- Transparent pricing;
- Service quality;
- Complaints and error resolution;
- Data quality, privacy and security.
Non regulatory tools to address these issues include redress mechanisms, market-based mechanisms, self-regulation, consumer education and financial literacy.Finally, consumer protection mechanisms at the BOP need to:
- Keep regulation light and focused on products, providers and delivery channels;
- Consider regulatory capacity constraints;
- Leave space for market innovation and experimentation;
- Balance protection and access policy goals.
