Problems in Fintech Design

Data Gaps on Morbidity, Mortality, and Risk Profiles

Limited data on target segments makes pricing inclusive products difficult.

data-gaps-morbidity-mortality

Data Localization and Fragmentation

Divergent data rules complicate cross-border payments and increase operational costs.

data-localization-fragmentation

De-Risking and Correspondent Bank Exit

Global banks exit high-risk corridors, cutting off local providers and raising remittance costs.

de-risking-correspondent-bank-exit

De-Risking Leading to Account Closures

Banks exit customers, NGOs, and small MSBs due to perceived AML risk, cutting off access.

derisking-account-closures

Debt Traps and Chronic Rollovers

Borrowers repeatedly roll over or refinance high-cost loans, becoming trapped in persistent indebtedness.

debt-traps-chronic-rollovers

Digital Credit Overextension

Instant mobile and app-based loans enable borrowers to take repeated small loans without adequate checks.

digital-credit-overextension

Digital Exclusion Due to Device and Data Costs

Smartphone, data, and electricity costs prevent low-income users from accessing digital payment services.

digital-exclusion-device-data-costs

Digital-Only Banking Excluding Low-Digital Users

Shift to digital channels leaves those with low digital literacy, limited devices, or disabilities behind.

digital-only-banking-exclusion

Discrimination and Bias in Branch and Service Interactions

Certain groups face biased treatment or discouragement when trying to open or use accounts.

discrimination-bias-branch-service

Discrimination in Subprime Lending

Protected groups face higher prices, denials, or targeting for predatory products in small-dollar markets.

discrimination-subprime-lending

Discriminatory Merchant Routing and Surcharging

Differential pricing and hidden surcharges penalize certain users or payment instruments.

discriminatory-routing-surcharging

Discriminatory Pricing and Exclusions

Protected groups face higher premiums or hidden exclusions based on geography, gender, health, or occupation.

discriminatory-pricing-exclusions

Excessive Reliance on Employer Relationships

Access to payroll-linked loans depends on employer partnerships, excluding informal and gig workers.

excessive-reliance-employer-relationships

Excessive Reliance on Physical Signatures and Paperwork

Paper-heavy processes slow inclusion and increase friction for low-income and remote users.

excessive-physical-signatures-paperwork

Excessive Waiting Periods and Restrictive Exclusions

Long waiting periods and broad exclusion clauses reduce effective value of cover.

excessive-waiting-periods-exclusions

Exclusion of Informal Workers and Gig Economy

Workers without formal employment records struggle to access fair, small-dollar credit.

exclusion-informal-gig-workers

Exclusionary Language and Interface Design

Payment products are not localized linguistically or culturally, limiting uptake among key groups.

exclusionary-language-interface-design

Exclusionary Underwriting and Pre-Existing Condition Clauses

Health and life products exclude common risks faced by low-income groups, undermining usefulness.

exclusionary-underwriting-preexisting-clauses

Exploitative or Hidden Foreign Exchange Margins

Banks hide large FX spreads on remittances, card use, and cross-border transfers.

exploitative-hidden-fx-margins

Fragmented and Inconsistent Regulation Across Jurisdictions

Divergent rules complicate cross-border offerings and protections for small investors.

fragmented-inconsistent-investment-regulation

Fragmented Digital ID and Authentication

Inconsistent or weak identity and authentication frameworks undermine secure, inclusive payments.

fragmented-digital-id-authentication

Fragmented or Overlapping Regulatory Oversight

Multiple agencies oversee small-dollar credit with unclear mandates, leaving protection and innovation gaps.

fragmented-overlapping-oversight

Fragmented Supervision of Bank-Fintech Partnerships

Complex partnerships (BaaS, embedded finance) create gaps in accountability and protections.

fragmented-supervision-bank-fintech-partnerships

Fragmented Supervisory Oversight of Insurance Channels

Multiple regulators oversee banks, MFIs, and digital channels selling insurance with gaps and overlaps.

fragmented-oversight-insurance-channels