Problems in Fintech Design

Affordability of Premiums for Small and Volatile Incomes

Standard premium structures do not match low, irregular incomes, leading to lapses or non-take-up.

affordability-premiums-volatile-incomes

Aggressive or Abusive Collections Practices

Subprime borrowers face harassment, intimidation, or unlawful tactics during debt collection.

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Algorithmic Bias in Account Monitoring and Risk Scoring

Automated systems may unfairly flag or de-risk certain groups or geographies.

algorithmic-bias-account-monitoring

Ambiguity Around What Constitutes Microinsurance

Inconsistent definitions hinder tailored regulation, reporting, and supervision of inclusive products.

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Ambiguity Over When Credit Becomes Predatory

Lack of clear standards on what constitutes predatory small-dollar lending complicates supervision and enforcement.

ambiguity-when-credit-predatory

Barrier of Formal Identification and Documentation

KYC and proof-of-address create obstacles for marginalized users to open investment accounts.

barrier-formal-id-for-investing

Barriers for Youth and First-Time Investors

Young people face onboarding frictions, paternalistic limits, or are targeted with speculative products.

barriers-youth-first-time-investors

Barriers to Cross-Border NGO and NPO Payments

Civil society organizations face blocked or delayed payments due to risk controls and de-risking.

barriers-cross-border-ngo-npo-payments

Barriers to Government-to-Person Digital Payments

Design and delivery of G2P transfers fail to leverage inclusive, low-cost payment rails.

barriers-g2p-digital-payments

Barriers to Joint and Household-Shared Accounts

Products are not designed for shared livelihoods, caregivers, or group-based financial management.

barriers-joint-household-accounts

Barriers to Switching Bank Accounts

Cumbersome processes, payroll links, and bill pay setups lock users into poor-value relationships.

barriers-to-switching-bank-accounts

Basis Risk in Index and Parametric Products

Index triggers may not match actual losses, eroding trust in parametric and crop insurance.

basis-risk-index-parametric

Behavioral Bias Exploitation

Products are designed to exploit optimism bias, present bias, and complexity, harming vulnerable borrowers.

behavioral-bias-exploitation

Card-Dominated Merchant Acceptance Costs

High MDR and acquirer fees deter small merchants from accepting digital payments, especially for low-ticket items.

card-dominated-merchant-acceptance-costs

Collateralization of Essential Assets

Low-income borrowers pledge essential assets (wages, IDs, tools, housing) to secure small loans, increasing vulnerability.

collateralization-essential-assets

Complex and Opaque Policy Terms

Insurance policies use dense legal language that low-literacy customers cannot understand or compare.

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Complex Fee Schedules and Disclosures

Customers cannot easily understand fee structures, interest, and conditions attached to accounts.

complex-fee-schedules-disclosures

Complex or Onerous KYC for Low-Income Borrowers

Strict or poorly designed KYC/AML processes make it difficult for informally employed or undocumented people to access credit.

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Complex Switching and Exit from Poor-Value Products

Investors face friction, penalties, or opacity when trying to exit high-fee or unsuitable products.

complex-switching-exit-poor-value

Complex Tax and Regulatory Treatment of Inclusive Products

Tax and compliance rules unintentionally penalize small-ticket or community-based schemes.

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Complex Tax Treatment of Small Digital Payments

Unclear or burdensome tax rules for micro-merchants using digital payments discourage formalization.

complex-tax-treatment-small-payments

Confusing or Hidden Terms for Wallet Fees

Wallets and prepaid products use complex fee schedules that erode small balances.

confusing-hidden-wallet-fees

Cultural and Religious Mismatch with Conventional Insurance

Conventional insurance structures may conflict with religious or cultural views, reducing uptake.

cultural-religious-mismatch-conventional-insurance

Currency and Inflation Risk Eroding Real Returns

High inflation or FX depreciation wipes out returns for small savers holding cash-like or local assets.

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