Empowering Consumers: The Future of Responsible Finance

Payal Dalal, Executive Vice President, Global Programs, Mastercard Center for Inclusive Growth, and Marcelo Tangioni, Division President, Brazil

Mastercard recently participated in a gathering of ideas and innovations at the Responsible Finance Forum (RFF), Fortaleza, Brazil. The event, which convened over 120 global stakeholders on the sidelines of the G20 Global Partnership on Financial Inclusion, was a space for open dialogue about critical issues such as financial inclusion and digital public infrastructure (DPI), and what that future-facing solutions and outcomes could look like as we come together to shape an equitable financial future for all. 

Below are some reflections and observations we want to share.  

Innovation catalyses financial health 

“Innovation” gets mentioned a lot but in finance, it is more than just a buzzword; it is the bedrock from which we empower consumers, by redefining the design and delivery of financial products and services.  

By joining the Open Finance Brazil initiative, companies such as Nubank and Monet presented how they are redefining the way financial institutions share customer data with other institutions to deliver everyday services. Imagine receiving an alert indicating you have idle funds that could earn you interest – it’s a small nudge that has the potential to yield substantial dividends in the future and significantly enhance a customer’s long-term financial health. From aggregating balances across multiple accounts and developing alternative credit scores, to alerting customers about idle money that could be invested, Open Finance has the potential to empower consumers and bring tremendous benefits to unbanked or underserved populations with the tools they need to take control of their financial destinies.  

Innovation can come from anywhere, and we saw numerous startups that are leveraging digital platforms to provide solutions to challenges emerging from the rapidly evolving financial services sector. Take Flourish FI’s approach to embedded financial education. Using behavioural nudges and gamified tools, Flourish FI encourages consumers to adopt healthy financial habits – all while learning about personal finance in an engaging and interactive manner. We've learned from work with Flourish FI and other digital partners, that embedding behaviour design into digital platforms can enable millions of workers and small business owners to progress from financial inclusion toward financial resilience and health.  

Likewise, Quipu is providing financing for informal businesses by building an equitable AI credit scoring platform. Across Latin America and the Caribbean, micro-entrepreneurs operating within the informal sector face systemic exclusion from formal financial systems. The inability to verify their financial history is a significant barrier and prevents them from accessing formal credit channels. By providing a financing platform that uses alternative benchmarks to determine creditworthiness, such as using deep learning to analyze videos and pictures to help assess the strength of a business, Quipu has proved its model with over 8,000 borrowers, 52% of whom are women and 90% of whom are blacklisted by credit bureaus, and now is scaling through partnerships like MFIs and digital wallets.

When financial services are tailored to meet specific needs, we create a more resilient and inclusive financial system that empowers everyone to thrive. 

Consumers are the heart of financial services  

While fostering innovation is crucial, it only works when driven by a deep understanding of consumer needs and outcomes. The Forum underscored the need to balance financial innovation with robust regulatory frameworks to ensure consumer interests are safeguarded and central to the development of financial products and services. 

Aayushi Chaturvedi, Consumer Insights Lead at Consumers International spoke about keeping consumers at the core of financial product development. Looking at consumer protection challenges such as price shrouding, overcharging, predatory collections, and rising fraud, Chaturvedi explained that for financial products to genuinely benefit consumers, we must scrutinize their ability deliver security and health outcomes. Going beyond just adoption, Consumers International focuses on the real-world impact of financial products, which must be effective and safe for consumer use. 

Consumer-specific insights are critical across markets and institutions like the Central Bank of Brazil, who are investing in research to understand the barriers to adopting digital payment platforms like PIX. But, we must move beyond identifying these barriers, to understanding how digital platforms impact consumer financial health. Only then can we truly drive the development of more effective financial solutions.  

A recent study published by Mastercard and Nubank explored consumers’ journey beyond financial access towards financial health. The study, which analysed pseudonymized and aggregated data from 3.6 million Nubank customers, revealed that providing unbanked and underbanked populations access to digital financial services can generate significant economic and social impact. In fact, 60% percent of Nubank’s customers moved from financial access to usage in 24 months; and 40% within 12 months, regardless of income level.² Exploring how their products impact consumer health has allowed Nubank to validate the effectiveness of their services, while also identifying areas for improvement. This commitment to continuous improvement based on consumer feedback and experience is the foundation of the future of responsible finance.  

Create a resilient and sustainable financial system 

To fully embrace innovation, financial systems must be built to withstand shocks while continuing to serve consumers effectively. While the Forum highlighted the pivotal role of regulatory frameworks to provide guardrails that still allow innovation to thrive, that is only one part of the conversation. To reach the desired outcomes for end users, we must also turn our attention to how we design the digital building blocks that enable the delivery of digital financial services.  

Dr. Julie Zollman and Nanjira Sambuli’s research on the implications of Kenya’s nascent DPI journey highlighted the exceptionally low trust citizens have in the government’s accountability mechanisms and illegal use of citizen digital data. Examining what it means to responsibly promote DPI, their research underscored the importance of enabling choice and encouraging an outcomes-based approach. This is not just about offering more options; it’s about making sure these options lead to better financial outcomes for consumers.  

As we move forward, it is essential to remember that at the heart of responsible finance is the consumer. Every innovation, regulation and research effort must ultimately aim to enhance the financial health of consumers. By doing so, we can build a financial system that is not only robust but truly inclusive for all.