Page 10 - FIGI - Use of telecommunications data for digital financial inclusion

Use of telecommunications data

for digital financial inclusion

1 INTRODUCTION

This short paper reviews the use of telecommunica- icant, or even any, transaction record with a bank or
tions data in digital financial services (DFS). other financial institution. If telecommunications can
These data can enable a telecommunications bridge the physical distance between those who live
operator and others that have access to such data to far from financial service providers, the data generat-
assess the regularity and scale of a customer’s cash ed may bridge an information gap between provider
flow, stability of his or her financial condition and and customer.
nature of his or her social network. Such data can be This paper describes the types of telecommuni-
used to profile the customer for the purpose of tar- cations data to which telecommunications operators
geting services appropriate to his or her needs and have access, how such data are used in DFS, and
capabilities, and offering risk-related services such as how better use of telecommunications data could be
credit and insurance. facilitated, including through the adoption of stan-
This offers an opportunity to extend financial ser- dards relating to such data.
vices to customers who do not have any other signif-

2 THE OPPORTUNITY OF DFS

Access to basic financial services is a vital part of such as business finance or consumer credit, such
development, providing the means to manage and customers have been effectively shut out of access
protect wealth, invest in the future, and surmount to such services.
crises. In less-developed economies, large propor- Banking has been transformed by becoming avail-
tions of the population have not had reliable access able online. However, many such services typically
to such services. Their banks have often been require a device capable of using an app or browser
concentrated in urban areas, catering to higher-in- rather than a feature phone, and access to the inter-
come individual and business customers. As a result, net. Large amounts of the population remain unable
many low-income people, and people and small to afford such a device, lack such connectivity, or
businesses in rural areas, have not had bank deposit may struggle with the necessary level of technologi-
accounts. As deposit accounts often serve as gate- cal or financial literacy.
way products to access formal financial services

8 Use of telecommunications data for digital financial inclusion