Page 22 - FIGI - Use of telecommunications data for digital financial inclusion

benefit from analysis of their customers using train- 6.4.2 Consumer protection and privacy
ing data and big data algorithms developed across all The more that telecommunications data is used
operators in a country in order. The strong improve- for purposes beyond managing the provision and
ment in Brazilian operator Claro’s financial results marketing of telecommunications services, the more
from upgrading prepaid to post-paid accounts important it will be to ensure it is subject to safe-
mentioned in section 4.3 is only part of the oppor- guards. Consumer protection and privacy rights
tunity. In addition, telecommunications operators must be respected, of course, such as ensuring that
can use such analytic tools to optimise the custom- consumers are aware what data are collected about
er lifecycle, minimising churn and increasing lifetime them and their activities, and for what purpose they
customer value, as well as obtaining more deeper are collected, that only such data as are required for
and more accurate insights into their customer base. such purposes are collected, and that the use of the
This greater attention to the value of telecom- data is legitimate (whether because authorised by
munications data, combined with standards and in law, the consumer’s consent or otherwise).
due course regulatory endorsement, can reasonably The G20 High-Level Policy Guidelines on Digi-
be expected to lead to greater use and ultimately tal Financial Inclusion for Youth, Women and SMEs
improvements in a wide range of services. includes Featured Policy Option No. 3.7: “Ensure the
The generation of revenue from telecommunica- responsible use of alternative data, consistent with
tions data may also lead to a shift in the value of pro- applicable laws and good practices related to con-
viding telecommunications services from collection sumer protection, and remain vigilant to potential
of consumer payments for mobile or data services to financial stability risks.” 20
the collection of data that can be monetized by tele- However, ensuring informed consent to use of
communications companies in other ways. If the cost any data presents a challenge for financial inclusion.
of providing telecommunications services declines On one hand, informed consent is widely used as a
relative to the value of data being collected, telecom- touchstone to protect individual data privacy rights.
munications operators may adjust their commercial Yet in the context of a mobile application, the con-
practices to encourage greater uptake of mobile ser- sumer’s transaction costs associated with obtaining
vices that generate the data and use of mobile hand- and providing informed consent may result in a pro
sets that are capable of generating valuable data. forma click.
This could result in more smartphone subsidies, and
contribute to narrowing the digital divide.
Using telecom data for DFS in Brazil
6�4 Regulating to support responsible use of tele- Data analytics firm Cignifi has partnered with four
communications data mobile operators. They are producing scores for
fraud purposes. Using a collaborative model that
includes all four mobile operators in the market
6.4.1 Data for social value provides scale and increases the reliability of the
In addition to endorsing standards discussed in data, increasing its value to lenders. The credit
section 8.2, regulatory authorities in telecommunica- bureau hosts the data and offers low cost distribu-
tions and financial sectors might be encouraged to tion to major consumers of the data such as banks
and insurance companies. Brazilian data privacy
consider other ways to exploit telecommunications rules permit use of personal data for fraud and
data for greater social value in DFS. For instance, credit without requiring customer consent. Data
Brazil introduced in 2019 a requirement for tele- is interrogated using an “enquiry only model” lay-
communications operators and other utilities to er of software to query the databases for Yes/No
answers without sharing the raw data itself, e.g.,
report positive credit data (i.e., not merely negative to verify whether a cellphone number matches a
data recording defaults but positive data record- national ID number. This allows the creation of val-
ing successful payment of debts) for credit refer- ue from extraction of sensitive data from its source
ence purposes. The availability of this data at scale while preventing disclosure of unnecessary per-
sonal data. For example, it anables the analytics to
enables firms to achieve considerably more precise produce a localization score validating the home or
assessments of customers’ likelihood to repay debt. work address of a customer using his or her geolo-
Because it is industry wide, it produces a very large cation pattern as a mobile phone user. This is then
volume of data about the population, lending itself used for onboarding the customer for ecommerce
and financial products.
then to big data analytics.

20 Use of telecommunications data for digital financial inclusion