Consumer Risks in Fintech

Fintech is increasingly recognized as a key enabler for financial sectors worldwide. However, along with its benefits, fintech also poses a range of risks to consumers that need to be mitigated in order for fintech to truly benefit consumers. The COVID-19 pandemic has further accelerated the widespread transition of consumers to digital financial services/fintech, increasing their exposure to potential risks during a time of crisis and economic stress. Authorities responsible for financial consumer protection (FCP) are increasingly faced with the challenge of identifying new manifestations of risks to consumers generated by fintech and developing appropriate regulatory measures to address them. The task of regulators in developing countries is even more difficult when attempting to tackle this new challenge while having to implement baseline FCP frameworks at the same time.

The World Bank’s new policy research paper titled ‘Consumer Risks in Fintech: New Manifestations of Consumer Risks and Emerging Regulatory Approaches’ is intended to provide authorities with a resource that synthesizes the kinds of regulatory measures that are beginning to emerge internationally to address new or changed risks for consumers arising fintech. The focus of the paper is on fintech offerings that address some of the most basic needs of lower income, and often less experienced, financial consumers - namely making payments, borrowing, or investing money.

This event is divided into two parts:

• Part 1: Digital microcredit and e-money.
  This session will explore new manifestations of consumer risks posed by digital microcredit and e-money offerings and emerging regulatory responses and country approaches intended to address those risks.
• Part 2: P2P lending and crowdfunding.
  This session will explore new manifestations of consumer risks posed by P2P lending and crowdfunding offerings and emerging regulatory responses and country approaches intended to address those risks.

The event will also discuss cross-cutting risks to consumer as well as implementation considerations for policymakers seeking to identify the main risks in their markets and design appropriate regulatory responses.