Digital Financial Services Research Group

The Digital Financial Services Research Group (DFSRG) investigates technologies that improve the ability of banks and mobile operators to deploy Digital Financial Service (DFS) products that reach the poor.

Low profitability, lack of client demand, and the outright failure of many DFS launches can be traced back to difficult barriers and frictions that hinder the business model and scalability of DFS systems.

Many of these barriers and frictions could be addressed by high potential emerging technologies but often the requisite translation of these technologies from the lab or from other sectors into usable tools for the DFS space is not happening with the necessary urgency.

We conduct formative research to identify opportunities for new technologies in Digital Financial Services. We look for ideas that address our challenge areas and have the potential for dramatic improvements in efficiency, speed, scalability, cost, security, and client value. We then take these high potential ideas and prototype and fieldtest with our mobile operator and bank partners. Finally, we refine those technologies and work with our partners to transfer our technology into commercial applications.

The following set of DFS problems have been identified as the highest priority for technology innovation:

Challenge Areas

The following set of DFS problems have been identified as the highest priority for technology innovation:

  1. Fraud and cyberattacks - Going forward there will be increasing risks to both consumers and providers from counterfeiting, petty fraud, and unauthorized third party transactions.
  2. Proximity payments user experience - Current solutions are slow (1min+) and taxing on consumers requiring many steps and entering numbers, thus limiting the potential to digitize the economy through this important channel.
  3. Identity and on-boarding – Know Your Customer (KYC) requirements and lack of digital ID verification technology delay customer sign-up for DFS as does the difficulty of communicating value and convincing clients. Inputting customer data, verifying ID/biometric, and teaching customers about the product and its value to them are all major commercial challenges which often result in failure to enroll or low levels of active usage. Governments and bulk payers lack low-cost identification, authorization, and targeting mechanisms for social welfare disbursements.
  4. Analytics for product development and risk scoring – Lenders, insurers, and other DFS providers have limited client data and poor analytics capability. This limits product design efforts and defeats credit and insurance risk profiling.
  5. CICO agent recruitment, training, and management - With large, distributed agent networks, it is difficult for agent network managers to train agents to reach a consistent quality of service. Agents also have difficulty maintaining sufficient cash balances and when banks are far and have limited hours. Agent network management is the highest cost center for mobile money deployments.
  6. Financial management and budgeting by end users – poor clients find it hard to plan, budget, optimize, shield money from temptation, or avoid having it appropriated by others. This results in failures to achieve savings goals, over-indebtedness, underinsured, missed opportunities, high stress, and low asset accumulation.The future home of a DFS Research Group Home Page