What does responsible online lending look like?
This powerpoint sets forth the overview of the research study which will be conducted in the first half of 2017 on the topic of responsible online lending practices including research studies, guidelines, policy notes, as well as standards that are being used to address consumer protection and risk mitigation practices in online lending across various jurisdictions. The study will especially focus on online lending practices not only of supervised financial service providers but more importantly those being provided by new alternative financial service providers, which may be lightly regulated or not regulated at all. Interviews with financial consumer protection agencies/associations, regulators and online credit industry players from several key markets, as well as discussions with key researchers and thought leaders from this industry will also be conducted.
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What does responsible online lending look like?
- 1. December 14, 2016 What does responsible online credit look like?
- 2. New Alternative Online & Digital Platforms Tech and e- commerce giants Loan aggregator portals Mobile data-based lending models Online balance sheet lenders P2P Lending 10
- 3. Alternative data-based lending has opened new and innovative credit opportunities for individuals and SMEs, these new technologies and providers also come with several consumer protection challenges
- 4. Seven Main Areas • Data privacy and opt-in vs. opt-out challenges • Underwriting practices • Potential for exclusion of certain categories of clients • Cyber security & individual data protection • Clear and effective disclosure over-pricing & terms • Customer recourse, complaint management & dispute resolution • Collection practices
- 5. Online lending for consumers and especially SMEs is highly relevant and important to expand access to finance and overall financial inclusion
- 6. Trust, confidence & responsible lending practices need to be in place in order to ensure that this industry is able to continue to offer access to credit
- 7. Some efforts underway but no agreement yet on standards
- 8. Research will examine: • Various customer risks proposed by online lenders • What standards and practices are being proposed in some key jurisdictions • What best practices can be recommended for setting consumer protection and risk mitigation standards for the emerging online financial services industry
- 9. John V Owens Senior Digital Financial Services Advisor johnvowens@me.com @jvowens Thank You
Hinweis der Redaktion
- There are approximately 1.5 billion people globally, the majority of who live in Asia and Africa, who cannot prove their official identity This cuts them off from basic services. It marginalizes their participation in the economy. Individuals who lack official forms of identification are typically the most vulnerable people in the poorest countries. Identity verification is crucial in order to comply with KYC requirements for account opening and financial inclusion. KYC is required in order for financial service providers to assess and manage risks. With the rapid growth in digitization, new technologies and new user behaviors are revolutionizing the ways financial service providers gather information for identity verification. One example is the Aadhaar identification system in India. Through the use of biometrics, the customer verification process has been reduced from 2 to 4 weeks to less than a minute. With the Aadhaar system, the number of people in India with a national identification has reached over 1 billion people. Some countries such as Indonesia, Malaysia and the Philippines have adopted proportionate risk-based KYC regulations. This allows small accounts to be opened without the same requirements that are imposed on larger accounts. It provides greater access to financial services and financial inclusion in general.