For people living in poverty around the world, the issues of their personal and financial privacy may prevent them from seeking financial inclusion or participating in financial opportunities. Concerns about big data breaches, identity theft, and credit reporting and coercive behavior on the part of lenders can all cause people to avoid the financial services and products that can help them participate fully in the global economy.
When people are just beginning to use financial services, they may not have the knowledge or experience to deal with inaccurate credit reporting or coercive behavior by lenders. Some digital lenders in Kenya have, as part of their agreements for micro and small loans, the promise that if the repayment is delayed, their personal and financial information will be posted publicly. This effort at shaming and coercion is not unique to Africa. In the US, Navy Federal Credit Union, the largest credit union in the nation, was just fined $28.5 million by the Consumer Financial Protection Bureau for coercive behavior on late loan repayments such as threatening calls to employers and commanding officers for active duty service members.
Large data breaches by hackers who have released financial data are becoming very common, with Yahoo’s half a billion breach following Target, JP Morgan Chase, The Veteran’s Administration of the US Government, and others. The other side of this coin is big data, which is hoping to use large amounts of seemingly unrelated personal data to develop the new industry of machine learning, or artificial intelligence. While the risk-algorithms being developed are still in testing, large amounts of personal data from all over the world is being stored for use. Risk-scoring for various uses is becoming increasingly automated, and many people world-wide do not know how to challenge an error or an inaccuracy that may keep them from accessing housing, employment, or financial services.
The perception that financial inclusion means putting personal privacy at risk is one that needs to be taken seriously. It is worth, at the least, careful study on how much privacy-risk people are willing to endure in order to participate in financial inclusion.
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