The Central Bank of Kenya governor Dr. Patrick Njoroge wrote an op-ed in local paper Business Daily focusing on the intersection of financial services and technology. In the OP-ED, Njoroge questioned the continued high cost of digital financial services especially to low-income households and vulnerable groups. The sector has been transitioning into better and cheaper technologies such as the current shift from USSD based services to Apps as more users access smartphone devices. “Consumers should also benefit from reduced marginal cost of additional digital financial services, as provided by the underlying technologies”, reads part of the op-ed.
The governor also questioned if there is a need to foster interoperability of these services as a way of increasing innovation in the sector. He highlighted that increasingly, technological platforms have increased standardization of processes and structures. For this, the governor seems to advocate for open systems as a measure of widening consumer choice. On the standardization, Governor Njoroge noted that market leaders would, however, raise switching costs and create network effects which would then counter to the long-term objective of enhancing market access with evolving technology hence the open systems suggestion.
Dr. Njoroge also talked about consumer protection with regards to disclosure of fees, terms & conditions, insufficient agent liquidity, irresponsible lending practices, agent fraud and system downtime. He also spoke of the need to protect the privacy of data these companies seeing that cyber crime cases have become common place. He noted that there needs to be urgent attention in discussing questions on the ownership of the vast amounts of data collected by digital financial services. This certainly would be interesting especially with the proposal to open up digital financial services.
Source: Business Daily