Informed Consent: How Do We Make It Work for Mobile Credit Scoring

This report, the first product of the consumer protection research partnership between First Access and the World Bank’s Consultative Group to Assist the Poor (@CGAP), explores what consumers understand about their mobile data, and how it is being used by financial service providers and what methods for informed consent might help ensure that individual borrowers understand how their information is used.

First Access (www.firstaccessmarket.com) is a data analytics company that works with lenders to use mobile data to predict credit risk for base-of-the pyramid (BoP) financial consumers. The mission of First Access is to help these lending institutions reduce their lending costs by predicting credit risk for clients in the informal sector, billions of whom are still shut out of the formal financial system due to lack of collateral or quantifiable information about risk. To better protect and inform these consumers, First Access approached CGAP to help them use consumer research to determine the following:

  • What do consumers understand about their mobile data, and how it is being used by financial service providers? 
  • What methods for informed consent might help ensure that individual borrowers understand how First Access uses their information?
Working directly with BoP consumers in Tanzania, CGAP and First Access used a series of field tests to determine appropriate methods for informing borrowers in Tanzania how their data will—and will not—be used by First Access. These research methods and findings are the subject of this paper and have important implications not only for First Access, but for appropriate and responsible use of consumers’ mobile records for financial inclusion globally.
 
Key findings from the research include the following:
  • Consumers expressed strong interest in the way their data could be used for loan determination, not just how this data would be kept private. Furthermore, many consumers noted that the need for a loan would supersede concerns for privacy, making clear why it is important for providers to develop standards for informed consent and data protection up front in product development.
  • Consumers can gain a basic understanding of concepts of data privacy and credit scoring through simple messages.
  • At the same time, a single message may not be sufficient for consumers to fully understand the use of their mobile data, so opportunities for follow up should be built into the process. 
  • Data usage and data privacy are interlinked in consumers’ understanding of the process, and so may need to be presented in a single message to highlight their linkages.