Fintech Path to Responsible Innovation: The Importance of Customer Data

The co-founder and CEO of 60 Decibels, Sasha Dichter, says that fintechs must use customer data in the right way in his article at Fintech Magazine. The rapid growth of the fintech industry has undoubtedly improved financial inclusion on a global scale. However, concerns about potential exploitation of low-income customers and aggressive offerings have raised alarms among regulators. In this evolving landscape, the critical question emerges: Are fintechs driving financial inclusion or pushing vulnerable consumers to the brink of ruin?

The truth is, we lack the data necessary to provide a conclusive answer. The absence of global, customer-level data on the impact of fintechs on consumers hinders companies, investors, and regulators from fully understanding the situation. To bridge this data gap, the sector needs comprehensive, comparable information that encompasses who fintechs are reaching, how their products are utilized, consumer protection practices, and the positive and negative impacts these products have on people’s lives.

Fortunately, the same mobile technology driving fintech growth also holds the key to filling this data gap. Through direct and cost-effective means, it is now possible to listen to the voices of the lowest-income customers worldwide at scale. An example of this is the Microfinance Index created by 60 Decibels in 2022, which collected data from 18,000 microfinance customers across 41 countries through voice-based phone surveys. These insights have allowed microfinance investors to defend the industry against negative criticism and take actions to expand their positive impact.

While microfinance has long prioritized impact, it is crucial for all financial products, especially fintechs facing increased regulatory scrutiny, to listen to customers’ experiences. Gathering customer data becomes an essential risk management tool for fintechs. Without it, the sector faces the risk of a backlash that could erase billions of dollars in financial value overnight. Comparable customer data empowers fintechs, investors, and regulators to determine whether their products and regulations genuinely help or harm customers.

Accion, a global nonprofit investing in inclusive financial service providers worldwide, has participated in the Microfinance Index and is expanding its efforts to gather customer social impact data across its global portfolio. They aim to understand the impact of their partnership with Mastercard and support fintechs in their Accion Venture Lab portfolio by collecting representative customer voice data. According to Amee Parbhoo, Managing Partner of Accion Venture Lab, data collection is crucial to scale solutions that offer the most value and foster financial resilience among underserved clients.

Quona, a global venture firm focused on inclusive fintech, also recognizes the significance of direct customer feedback. By engaging with their portfolio companies, they gather outcome-level impact results from stakeholders, facilitating impact measurement strategies. Their portfolio companies in Africa, Latin America, and Southeast Asia have embraced customer research, using rigorous data directly from customers to drive strategic decision-making and deliver greater impact.

The path forward for fintechs lies in proactive efforts to understand the true impact of their products on customers. The cost of gathering customer social impact data, on a global scale and annually, is a negligible expense compared to the potential damage caused by sensationalist journalism or negative regulatory consensus labeling fintech as predatory. Comprehensive data from customers not only helps fintech companies fulfill their promise of financial inclusion but also safeguards them against baseless accusations of negative impact.