The Social Media Usage by Digital Finance Consumer Project is part of IPA’s Consumer Protection Research Initiative. The objective of the project is to deepen the understanding of the types of consumer protection problems experienced by digital finance consumers across three countries and types of financial providers. It consists of a social media listening tool tested on digital financial services in Kenya, Nigeria and Uganda, and will be used to inform potential further experimentation with consumer engagement and complaint handling via social media by regulators and civil society.
The digitization of financial services has been on the rise in the past years and has experienced a particularly big leap after the COVID-19 pandemic due to the temporary closure of physical offices and bank branches of many financial service providers. As financial services go digital, so do consumers by sharing their experiences, complaints and reviews through online channels and social media. Increasing use of social media channels to share feedback, concerns, and challenges provides new opportunities for insights into issues affecting digital consumers which can complement traditional methods such as phone or in-person consumer surveys.
To explore these opportunities, IPA piloted a social media listening and analysis project for consumer protection monitoring in digital financial services. This project has been developed in collaboration with Citibeats, an Ethical AI platform analyzing unstructured text. The project collects historical data on consumer protection-relevant content published on Twitter, Facebook Public Pages and Google Play Store Reviews and analyzes it using Artificial Intelligence algorithms based on Natural Language Processing and semi-supervised machine learning. The analysis provides insights into the types of consumer protection issues faced by consumers across countries and financial providers, classified into four types: 1) Commercial Banks; 2) Telecommunication companies offering mobile money services; 3) Fintech start-ups mainly offering online lending products and payment methods; and 4) Microfinance institutions.
To learn more about the methodology and main findings of this project, click the "Download" button or the PDF preview image to the right to download the full report.
IPA Uganda conducted a random digit dial (RDD) survey on consumer protection issues with a completely virtual phone bank and a quota sampling protocol meant to cover a broad selection of adults in the country. Quota sampling involves placing calls until a quota is reached for each combination of respondent characteristics, whose prevalence in the target population is believed to be known. It is a good way to achieve samples that are representative along key dimensions. In some cases, it can increase time and monetary costs substantively to meet quotas for rare combinations of respondent characteristics.
I present evidence that unmet liquidity needs for indivisible, "lumpy," expenditures increase demand for betting as a second-best method of liquidity generation in the presence of financial constraints. With a sample of 1,708 sports bettors in Kampala, Uganda, I show that participants' targeted payouts are linked to anticipated expenditures, while winnings increase lumpy expenditures disproportionately. I show that a randomized savings treatment decreases demand for betting. And I use two lab-in-the-field experiments to show that unmet liquidity needs and saving ability are important mechanisms. These results cannot be explained by betting as a purely normal good.
Markets for consumer financial services are growing rapidly in low and middle income countries and being transformed by digital technologies and platforms. With growth and change come concerns about protecting consumers from firm exploitation due to imperfect information and contracting as well as from their own decision-making limitations. We seek to bridge regulator and academic perspectives on these underlying sources of harm and five potential problems that can result: high and hidden prices, overindebtedness, post-contract exploitation, fraud, and discrimination. These potential problems span product markets old and new, and could impact micro- and macroeconomies alike. Yet there is little consensus on how to define, diagnose, or treat them. Evidence-based consumer financial protection will require substantial advances in theory and especially empirics, and we outline key areas for future research.
Encouraging citizens to apply pressure on underperforming service providers has emerged in recent years as a prominent response to the failure of states to provide needed services. We outline three theoretical mechanisms through which bottom-up citizen-oriented pressure campaigns may affect development outcomes and investigate them via a large-scale field experiment in the Ugandan health sector. While we find modest positive impacts on treatment quality and patient satisfaction, we find no effects on utilization rates, child mortality, or other health outcomes. We also find no evidence that citizens increased their monitoring or sanctioning of health workers. Our findings, therefore, cast doubt on the power of outside actors to generate bottom-up pressure by citizens or improvements in development outcomes. Held up against the findings of other, similar studies, our results point to the salience of mechanisms other than citizen pressure for improvements in service delivery, and to the importance of baseline health conditions for the success of bottom-up, citizen-oriented pressure campaigns. Such conditions shape outcomes both across countries and within countries over time, with the latter finding holding important implications for countries undergoing rapid socioeconomic change.