Introduction: The double-edged sword of digital financial services

Digitisation has expanded access, reduced costs, and enabled innovation—such as pay-as-you-go solar loans benefiting over 100 million people. It also allows modularisation of financial services and use of extensive customer data.
However, risks have intensified. Fraud, data misuse, inadequate redress, lack of transparency, and network downtime are widespread. Power and information asymmetries are growing, particularly with algorithmic systems and emerging technologies.
CGAP argues that strengthening financial consumer protection requires all ecosystem actors to adopt a more holistic and proactive approach.

The need to boost consumer protection in the digital age

Evidence from CGAP, the OECD, Consumers International, and IPA shows accelerating DFS risks. In WAEMU, 90 percent of users in Senegal and Côte d’Ivoire faced DFS risks, with 32–40 percent reporting financial losses.
Authorities often struggle to keep pace due to limited capacity, reactive regulation, and insufficient focus on customer outcomes. Collaboration gaps between financial, telecom, data protection, and competition authorities compound risks.
Providers show uneven commitment to responsible practices, despite voluntary codes in some sectors.
Consumer vulnerability is heightened by distrust, low digital capability, gender bias in algorithms, and poor user interfaces. Distrust is rising globally: 23 percent of adults cite it as a barrier to account use, up from 16 percent in 2017.
CGAP calls for a holistic, multi-actor approach to anticipating and mitigating risks.

Defining the vision and goals of a responsible digital finance ecosystem

The Responsible Digital Finance Ecosystem (RDFE) aims to:

Enable actors, especially regulators, to better identify, prevent, and mitigate risks; and

Foster responsible provision of DFS that delivers positive outcomes, particularly for women and vulnerable groups.
The framework builds on existing regulation and supervision, reinforced by four components—the “four Cs”: customer centricity, collaboration, capability, and commitment. These apply across all DFS actors and complement existing FCP regimes.

Actors involved in an RDFE at the country level

Key actors include financial sector authorities, non-financial regulators (data, competition, telecom), DFS providers, consumer representatives, and market facilitators such as credit bureaux and technology firms.
A lead authority—whether a conduct authority, integrated regulator, or sectoral supervisor—must champion the RDFE.
Roles differ by context and evolve with market development. Stakeholder mapping and ongoing coordination help determine which actors must engage at each stage.

Key components of an RDFE

Customer centricity

Customer centricity emphasises positive outcomes—suitability, choice, fairness, voice, and safety. It shifts responsibility from consumers to providers and regulators.
Authorities can embed customer-centric approaches through conduct governance, product oversight, market monitoring, and responsible data use.
Providers should adopt customer-centric culture, human-centred design, and improved customer insight practices. Case studies (e.g., Digicel Haiti; Zoona Zambia) show gains in usage, satisfaction, and financial performance.
Consumer advocates contribute through data collection, awareness raising, and engagement with regulators.

Collaboration

Effective coordination reduces regulatory gaps and improves risk detection. Collaboration can be bilateral (authority–authority, authority–industry, authority–consumer, industry–industry) or multilateral (national working groups; cross-border coalitions).
Examples include Peru’s interoperability reforms, the Philippines’ Financial Sector Forum, and African regulators’ digital platform working group.
CGAP highlights that collaboration must be operational, not symbolic, requiring dedicated resources and governance structures.

Capability

Capability spans knowledge, skills, tools, resources, and organisational culture. Authorities need risk-based supervision, segmented data, SupTech, and ongoing staff development.
Providers require internal coordination, robust controls, and customer-centric systems.
Consumer representatives need financial sustainability, technical skills, and safe channels for engagement.
Consumers benefit from tailored financial and digital capability programmes delivered by authorities, civil society, and industry.

Commitment

Commitment requires sustained action by all actors. Authorities express commitment through strategy, rulemaking, supervision, and inclusion of FCP in national strategies.
Providers can adopt responsible finance principles, join industry codes (e.g., GOGLA, SPTF), and embed responsibility in governance.
Consumer advocates demonstrate commitment through coalition-building and sustained engagement.

Implementation considerations

Progress depends on local context, leadership, incentives, and resources. Incentives include improved effectiveness, prevention of crises, reputational benefits, business gains, and avoidance of enforcement action.
Implementation begins with a baseline assessment (consumer risk surveys, ecosystem mapping, self-assessments). Prioritised action plans should emphasise vulnerable populations.
Global bodies, funders, and technical assistance providers support capacity building and alignment with global principles.
Success is measured through reductions in DFS risks and improvements in customer outcomes, supported by gender-disaggregated data and follow-up surveys.