Problems in Fintech Design

Low Insurance Penetration Among Low-Income Households

Most low-income and vulnerable households lack any formal risk cover for health, life, crop, or assets.

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Low Participation of Low-Income Households in Formal Investments

Low-income households rarely hold formal investment products, missing long-term wealth-building opportunities.

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Low Trust in Insurers and Intermediaries

Historical mis-selling, delayed claims, and poor communication undermine trust in formal insurance.

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Low-Quality or Unsafe Savings Instruments for Small Balances

Some products expose small savers to high risk or erosion through fees and poor terms.

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Merchant Settlement Delays

Slow settlement to merchants creates liquidity strain and discourages digital acceptance.

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Micro-Targeting of Vulnerable Groups

Digital marketing tools target individuals in financial distress with aggressive high-cost offers.

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Mis-Selling of Bundled Banking Products

Accounts are sold with unwanted add-ons (insurance, alerts, services) that increase costs without value.

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Mis-Selling of Credit-Linked Insurance

Insurance bundled with loans is sold without clear consent, benefit explanation, or pricing transparency.

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Misaligned Agent Incentives in Lending Channels

Agents or brokers are rewarded for volume over suitability, steering borrowers into harmful products.

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Misaligned Incentives for Agents and Aggregators

Commission and quota structures reward volume over suitability, driving mis-selling.

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Misalignment of Incentives in Investment Advice

Commission-based and volume-driven models bias advisors against client best interests.

misalignment-incentives-investment-advice

Mismatch Between Repayment Schedules and Income Flows

Fixed repayment schedules do not align with volatile or seasonal incomes of subprime borrowers.

mismatch-repayment-income-flows

Misuse of Alternative Data for Scoring

Use of telecom, app, and behavioral data can be opaque, discriminatory, or privacy-intrusive for subprime borrowers.

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No Clear Framework for Robo-Advisor Accountability

Automated advice tools may lack transparency, oversight, and redress mechanisms.

no-framework-robo-advisor-accountability

No Safety Nets for Hospitalization Costs

Households face catastrophic out-of-pocket expenses without effective inpatient coverage.

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Opaque and Complex Investment Disclosures

Prospectuses, KIDs, and risk explanations are too complex for typical retail investors.

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Opaque FX Rates and Fees in Cross-Border Payments

Providers hide margin in FX rates or complex fees, preventing users from understanding true costs.

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Over-Complex Customer Due Diligence for Micro-Merchants

KYC/AML for small merchants is heavy and manual, discouraging digital acceptance.

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Over-Concentration in Employer or Single-Asset Exposure

Workers and small savers hold large positions in employer stock or single properties, increasing vulnerability.

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Over-Concentration in Few Large Insurers

Highly concentrated markets reduce competition on value, innovation, and distribution to underserved groups.

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Over-Exposure to Highly Volatile Crypto Assets

Retail investors concentrate savings in unregulated, speculative crypto assets without safeguards.

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Over-Reliance on Cash in Everyday Transactions

High cash usage increases insecurity, invisibility of income, and cost of access for vulnerable users.

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Over-Reliance on Collateral and Guarantors

Lenders require collateral or guarantors that low-income borrowers cannot provide, excluding them from formal loans.

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Over-Reliance on Group Policies Without Transparency

Group covers via employers or lenders are opaque; members do not know benefits or have portability.

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