On June 9, 2020, the Financial Inclusion Program at IPA convened a global network of more than 60 researchers working on consumer protection and digital finance issues for the Launch Meeting of the Consumer Protection Research Initiative. This virtual meeting featured presentations by Initiative leadership Xavier Giné of the World Bank and Rafe Mazer of Innovations for Poverty Action, researcher presentations by Dani Madrid-Morales (University of Houston), Matthew Bird (Universidad del Pacifico) and Paolina Medina (Texas A&M), and moderated discussion groups on the topics below.
This interactive virtual meeting helped the team better understand researcher interest and solicit feedback on research priorities and innovative methods that will lead to improved market monitoring, improved customer experience, and expanded consumer choice in the initiative's priority markets.
10:00 - 10:15 AM | What does the research tell us so far, and what are the knowledge gaps?
Xavier Giné, Lead Economist, Development Research Group, World Bank
Drawing from extensive knowledge in this space, this opening presentation provided an overview of the existing literature on consumer protection and the existing gaps in the evidence.
10:15 - 10:30 AM | How can research be most useful for in-country partners and protecting consumers?
Rafe Mazer, Initiative Director, Consumer Protection, Innovations for Poverty Action
How does the Consumer Protection Research Initiative aim to bridge the existing evidence gaps? How will IPA connect decision-makers in industry and government with researchers? In this presentation, Initiative Director, Rafe Mazer shared how the new Consumer Protection Research Initiative will aim to connect researchers and practitioners to address consumer risks.
10:30 - 10:40 AM | Lightning talk: Social media and consumer voice
Dani Madrid-Morales, Assistant Professor, Jack J. Valenti School of Communication, University of Houston
Social media has dramatically changed the ways consumers and firms interact, and the growth of channels like Facebook and WhatsApp in emerging markets could yield important insights for consumer protection monitoring. Professor Dani Madrid-Morales shared insights and experiences in computational text analysis, machine learning, and other new methods, and what they could mean for consumer protection and financial inclusion.
10:40 - 10:50 AM | Lightning talk: Using trust to measure consumer sentiment
Matthew Bird, Professor, Universidad del Pacífico
Trust is an important component of increased use of financial services. But trust is also something that must be earned—and preserved. Exploring linkages between consumer protection, trust, and uptake of financial services is an important question to advance financial inclusion. Professor Matthew Bird presented on methods for measuring and rating trust, and how this demand-side data is being linked to new sources such as consumer complaint records from mobile network operators to yield insights into the experiences of digital finance users.
10:50 - 11:00 AM | Lightning talk: Borrower behavior after the US CARD Act
Paolina Medina, Assistant Professor of Finance, Mays Business School, Texas A&M University
The campus ban of the CARD Act in 2009 made it harder for students to get credit cards, leading to a 7% increase in student loan borrowing. Prof. Medina discussed how behavioral models can help explain this peculiar spillover effect.
11:00 - 11:20 AM | Breakout session 1 (Topics: A, B, and C)
11:20 - 11:40 AM | Breakout session 2 (Topics: A, B, and C)
A. Digital data trails and consumer protection: This group considered a range of data types and how researchers might use them for consumer protection research. Digital finance by nature means increased numbers of digital records. Where digital finance is replacing analog approaches, this means more detailed and easily accessed information on customers and accounts than was previously possible.This session explored what market monitoring and measurement possibilities these new data trails offer. Beyond that, it sought ideas for how we can move beyond monitoring and measurement to leverage these channels for testing new solutions via rigorous impact evaluations.
B. Digital channels and consumer experience: This group set the agenda on how digital delivery changes consumer risks, for good and for bad by shifting the channels and actors involved in product delivery and complaints handling. Issues such as unexpected fees, fraud, and poor service are not new to financial services. However, the introduction of new channels such as agents or digital banking introduces new channels for risks to affect consumers and new paths to support affected consumers with innovative approaches to customer care and third-party dispute resolution mechanisms. This discussion focused on the ways digital channels shift these risks and how we can better protect digital consumers, with particular emphasis on low-income, low literacy, or vulnerable populations.
C. Consumer choice: This session explored how information exchange between consumers and financial service providers impacts product choice. We explored these exchanges in both directions: Provider-to-consumer and consumer-to-provider(s). For the former, questions such as how to develop a key facts statement for apps or illiterate phone customers show the need for new research on transparency in digital product models. For the latter, the growing digital records of identity, product usage, and economic activity provide consumers opportunities to increase choice in providers and products. This becomes all the more powerful when linked to online marketplaces and comparison tools, which raise numerous opportunities for testing the impact of concepts like digital credit information systems and data portability tools.
11:40 - 11:50 AM | Readouts from sessions
11:50 AM - 12:00 PM | Final comments and next steps for the Consumer Protection Research Initiative
Rebecca Rouse, Program Director, Financial Inclusion, Innovations for Poverty Action