Remarks by Angel Gurría,
Washington, USA, 21 April 2017
(As prepared for delivery)
Ministers and Governors,
The expansion of Digital Financial Services - such as mobile and online financial services, electronic money, as well as branchless banking – is a major global phenomenon and is particularly widespread in the developing world. Digital Financial Services are currently available to over 60% of the world’s population, particularly in the form of mobile money.
They offer numerous possibilities for integrating the poor and other financially excluded populations into the formal financial system by overcoming physical infrastructure barriers and lowering costs – thereby extending access to new, faster and secure types of financial services and making finance more affordable to all.
In other words, digital finance offers opportunities to leapfrog, as witnessed by Alibaba’s expansion in China and Asia or India’s ambitious cash-less initiatives.
At the same time, major threats have emerged due to the spread of digital innovation, including new types of fraud; inadequate disclosure and redress mechanisms; unfair customer treatment, data insecurity and digital profiling; but also easier access to short-term credit and questionable digital offers.
These risks are compounded in the absence of financial and digital literacy. An OECD survey, circulated to you in Baden-Baden last month, showed low levels of adult financial literacy in most G20 countries.
Digital finance can also have a potentially damaging impact on consumers by bringing about new types of exclusion. For example, populations that are less familiar with finance and technology (often women, the elderly and small microbusinesses owners) may be denied credit or insurance delivered through digital channels. There is also a risk that youth, students and people with low-income may engage in risky financial behaviours and rely excessively on digitally delivered credit, which can lead to over-indebtedness. This is very relevant because young people are increasingly using financial products and also have low levels of financial literacy, as shown by our PISA financial literacy assessment.
The G20/OECD-INFE report on Ensuring Financial Education and Consumer Protection for All in the Digital Age, that is delivered to you today, shows that, alongside prudential regulation, both financial consumer protection and financial literacy are critical elements in ensuring an enabling framework for digital finance. It also shows that more needs to be done in most G20 countries to adapt consumer protection and financial literacy frameworks to emerging digitalisation trends and challenges:
Finally, co-operation between countries and institutions regulating and supervising financial consumer protection should be promoted as DFS are often sold across borders. Such cooperation is starting and the OECD stands ready to support these efforts through its different bodies (the G20/OECD Task Force on Financial Consumer Protection), the fora that it serves such as GPFI and FinConet, and a dedicated work stream of the OECD/INFE. We will continue to explore the implications of the digitalisation of finance for consumers and small businesses to achieve better policies for better lives in the digital age.
OECD work on financial education and consumer protection