Country: Pakistan

Fraud in Mobile Financial Services: Protecting Consumers, Providers, and the System

09 Sep 2017

This Brief highlights how fraud is impacting mobile money providers, agents, and consumers, as well as efforts to reduce risks and vulnerabilities to fraud in mobile money and related services. While it is not possible to remove fraud entirely from any service—mobile money included—the examples addressed here show that fraud is a major issue in several key markets for consumers and agents, and that there are simple steps providers can take to reduce their vulnerability to common fraud types.

These steps include improving internal controls, building agent capacity to protect themselves and their customers, and revisiting procedures such as account access and SIM swaps, where necessary, to prevent common fraud schemes. With the introduction of new products and delivery channels, the types of fraud will continue to evolve, which means that monitoring mechanisms, such as compliance checks and customer feedback channels, will continue to be key elements to effective fraud and risk mitigation.

Building a Secure and Inclusive Global Financial Ecosystem

08 Sep 2017

The 2017 Brookings Financial and Digital Inclusion Project (FDIP) report evaluates access to and usage of affordable financial services by underserved people across 26 geographically, politically, and economically diverse countries. The report assesses these countries’ financial inclusion ecosystems based on four dimensions of financial inclusion: country commitment, mobile capacity, regulatory environment, and adoption of selected traditional and digital financial services.  The report further examines key developments in the global financial inclusion landscape, highlights selected financial inclusion initiatives within the 26 FDIP countries over the previous year, and provides targeted recommendations aimed at advancing financial inclusion.

My Turn to Speak: Voices of Microfinance Clients in Benin, Pakistan, Peru and Georgia

26 Feb 2016

The Smart Campaign, a global organization working to promote a set of Client Protection Principles in the financial inclusion sector, has long recognized that client perspectives were underrepresented in consumer protection discussions. With the Client Voices project, the Campaign questioned whether assumptions made about what constitutes problematic treatment rightly reflected what clients themselves worry about.

To address this gap, the Campaign launched the Client Voices project, an ambitious research endeavor involving quantitative and qualitative research in Benin, Pakistan, Peru, and Georgia. The dual objectives of the project Executive Summary were (1) to solicit input from clients about what they consider good and bad treatment in their interactions with microfinance service providers; and (2) to assess the prevalence of consumer protection problems among microfinance clients using national quantitative surveys. The project is designed to act as a catalyst for local actors including regulators, microfinance associations, consumer advocacy groups, and others in each of the four markets to make improvements to client protection that is grounded in client feedback.

Bringing Client to the Centre: A consolidated report on client protection practices in Pakistan’s microfinance sector

12 Feb 2016

This collated “State of Practice in Client Protection” report documents and consolidates
findings from seventeen Client Protection assessments of Pakistan Microfinance
Network’s member organizations. These assessments were conducted over a
period of three years (2013-2015) under the Client Protection Initiative (CPI).

The Client Protection Initiative (CPI) was a 3-year project funded under State Bank
of Pakistan (SBP) Financial Inclusion Program (FIP), which kicked off in January 2013
and ended in March 2015. The project consisted of two components:

Pricing Transparency: promoting responsible and transparency pricing practices
among microfinance practitioners (MFPs) in Pakistan. This component was carried
out through partnership with Microfinance Transparency (MFT).

Client Protection Monitoring: conducting client protection monitoring through
third-party assessments of PMN member MFPs to ensure that these MFPs are complying
with global bench-marks for client protection, offering practitioners a client-
focused lens with which to view their institutions and to adequately fill any gaps
highlighted. This component was carried out through partnership with the Smart
Campaign (SC). Overall, nineteen institutional assessments were completed till May,
2015, providing us with a unique opportunity to gauge the compliance levels vis-àvis
client protection principles in Pakistan.

Client Voices Pakistan Country Report

31 Oct 2015

From March to October 2014, Bankable Frontier Associates (BFA) conducted qualitative and quantitative research on consumer protection issues related to microfinance in Pakistan for the Smart Campaign’s Client Voices project. The Client Voices project investigates clients’ own understanding of what constitutes good and bad treatment in their dealings with microfinance providers (MFPs) in four markets: Pakistan, Benin, Peru, and Georgia.

First, qualitative research using focus group discussions and individual interviews was carried out to understand what constitutes good and bad treatment from MFPs from the clients’ perspective, and to probe widely for the types of problems that might be occurring that are specific to each market. Second, a national survey of 900 clients (currently borrowing or who have borrowed in the last three years) and a 100-respondent sample of non-clients was used to evaluate the prevalence of the problems mentioned in the qualitative research at a national level in Pakistan.

In this context of a relatively advanced consumer protection environment, the survey reveals that 85 percent report being either very satisfied or somewhat satisfied with their borrowing or savings experiences. However, the respondents reported surprisingly short relationships with MFPs as well as several consumer protection issues and problems. Client claims of harsh treatment and inflexibility in the case of late repayment, confusion regarding terms and conditions, and poor recourse options identify key challenges.

Client Protection: The State of Practice

10 Jun 2015
CLIENT PROTECTION: THE STATE OF PRACTICE
A look at client protection practices in Pakistan’s microfinance industry

Due to its developmental origin, it is in the nature of microfinance that clients be placed at the heart of it. Given the reputational risks faced of late, it is pertinent to ensure that the industry – practitioners and investors alike – stay true to the clients they serve. Without doing so, it exposes itself to significant reputational and political risk that can have serious consequences for the industry’s growth and viability. For this reason, wider industry stakeholders have been promising long term sustainability to microfinance practitioners (MFPs) who place clients at the center of their work and subscribe to attaining the minimum standards of client protection, as defined by the global microfinance industry. Indeed, protecting clients is the bare minimum that MFPs ought to do while aiming to reach their social or business objectives. In this respect, tenets of client protection serve as the lowest common denominator for benchmarking practices, as these apply to all microfinance practitioners – irrespective of social mission (which can be quite variable from one institution to the next, ranging from bringing the most marginalized populations out of poverty to simply providing access to formal finance).