and payment service providers .
The commonly used fraud protection methods may not be adequate in protecting the unbanked and underbanked population , with the emerging unique vulnerabilities and limited experience with formal financial services . It is crucial for banks and other mobile money systems to develop fraud models and rules that are tailored to the specific needs and circumstances of this population .
Fraud prevention measures should consider the potential impact of even small losses on low-income individuals and households . What may seem like a nominal amount to a financial institution can be devastating for someone living in poverty . As such , fraud thresholds and response protocols must be adjusted to minimize the harm caused by fraudulent activities .
A friend who is visually impaired told to me that he received a refund from the taxman but made a withdrawal once thinking the remainder of the mount that he had planned to pay fees for his siblings would still be available only to find later on the account had no money .
As much as we talk about fraud its impact would greatly be reduced by the populace taking lessons in financial literacy . Thus , the importance of financial literacy which is a sum total of awareness , knowledge , skill , and attitude necessary to make sound financial decisions . The source of financial advice for individuals is an indicator of trust in institution or person . Knowledge of basic financial terms , ability to identify transaction costs related to a financial service are important elements in consumer protection and personal financial planning and budgeting .
Experts have alluded to massive challenge in protecting the unbanked and underbanked from fraud being the widespread lack of financial literacy . No doubt , lack of trust in financial institutions forms a significant barrier to
Empowering the unbanked and underbanked with the knowledge and skills they need to protect themselves from fraud is essential . It is important to prioritize financial literacy initiatives , such as targeted customer communication campaigns and educational programs that help individuals understand the risks of fraud and how to avoid it .
financial inclusion , particularly among the unbanked population .
As much as we highlight lack of financial literacy the onus lies with governments and policymakers who have a crucial role to play in addressing this issue . They must invest in regulations and governance that ensure the availability of safe , affordable , and convenient financial products for all as well as focus on targeted financial literacy initiatives that cater to the specific needs of the unbanked and underbanked population . These programs should be a collaborative effort between regulators and financial institutions , designed to help individuals build the skills and confidence they need to engage with the formal financial system and protect themselves from fraud and exploitation .
How can the underbanked be protected from fraud ?
It is well known that protecting the unbanked and underbanked from fraud is a complex and multifaceted challenge that requires the collaboration of governments , financial institutions , and technology providers . Some of these challenges can only be overcome by collaboration between different institutions .
The need for tailored fraud prevention measures : To effectively protect the unbanked and underbanked from fraud , there is need to invest in advanced fraud prevention technologies and processes aimed at real-time monitoring systems with capability to develop flexible rules , deploy custom treatment strategies , build models that can adapt to the unique behaviors of different demographics , simulate new strategies for different peer groups and deliver bespoke customer communication .
Develop state of the art digital identity infrastructure : Digital identities will play a critical role in promoting financial inclusion and preventing fraud . To maximize their benefits , you should focus on enhancing your digital identity infrastructure . This involves investing in data ingestion and orchestration capabilities to ensure that relevant identity data is collected , verified , and integrated into fraud prevention processes seamlessly and at the right time .
Policy makers considering developing financial literacy programs : Empowering the unbanked and underbanked with the knowledge and skills they need to protect themselves from fraud is essential . It is important to prioritize financial literacy initiatives , such as targeted customer communication campaigns and educational programs that help individuals understand the risks of fraud and how to avoid it .
As the world continues to digitize and more people gain access to formal financial services , institutions that prioritize these areas will be well-positioned to drive greater growth through financial inclusion , while protecting their customers and their bottom line from the evolving threat of fraud . It is now up to mobile money companies and banks to keep people ’ s money safe .
Wasilwa Miriongi is a Certified Credit Professional currently working as the Managing Director , Del Creder Credit Management Limited . You can engage him on this or related matters via email at : WMiriongi @ gmail . com