This blog is the first in our trust series where we study trust in digital financial services. This blog attempts to lay down the conceptual contours of trust.

India has made significant progress in financial inclusion over the years (Reserve Bank of India, 2022). However, obvious gaps remain. As per the latest Findex survey, India has the highest share of account inactivity globally at 35% (Demirgüç-Kunt et al., 2022). A recent report by Avendus estimates that 70% of credit demand of India’s Medium Small and Micro Enterprises (MSME) are unmet, signalling a substantial credit gap (Avendus, 2023).

Innovations in technology and business models in the last few decades have resulted in the rise of digital financial services (DFS) globally, including in India. DFS has the potential to reduce friction in accessing financial services leading to scale efficiencies, lower transaction costs and increase in speed— essentially overcoming the limitations of traditional banking (Pazarbasioglu et al., 2020). This makes DFS a promising instrument for advancing financial inclusion. However, recent studies suggest that DFS may yet have a long distance to traverse in furthering financial inclusion in India (Harihareswara et al., 2021). As of 2018 (which is the most recent available data) only 35% of Indian adults have ever made or received a digital payment. Observers also seem to suggest that the general growth in UPI transactions reported may be driven by increased usage by current users, rather than adoption by new users (Harihareswara et al., 2021). In the absence of official granular data, it is hard to comment either way.

Despite the rapid rate of digitisation in the country, why do such gaps remain in digital financial inclusion? Evidence from across the world suggests that trust is one of the key factors in the adoption of DFS (Manrai et al., 2021; Yan et al., 2021; Yiga & Cha, 2016). This would then imply that lack of trust could be one of the factors holding back the adoption of DFS in India. We assume that this is indeed the case, and we take it as a starting point to explore the notion of trust as a generic concept, and its specific application in the context of poor customers facing the advent of DFS.

Defining Trust – The Difficulty

We begin by noting that the word “trust” is both a noun and a verb. While the noun form anchors the word to a condition or orientation, the verb form describes an unfolding action carrying an expectation or an intention. A subtle confusion necessarily follows in various definitions that academic disciplines have attempted of the word. For example:

• Philosophers define trust sometimes as a belief (Keren, 2020) and sometimes as an emotion (Lahno, 2020). The former kind of definition suggests that “trust entails a belief about the object of trust: either the belief that she is trustworthy with respect to what she is trusted to do, or that she will do what she is trusted to do” (Keren, 2020). However, Lahno argues that such a belief, if it exists, properly originates in the capacity to rely on the object of trust, and therefore in an emotional attitude, and genuine trust is that prior emotional attitude. Here, we see that if the emotional attitude is the condition (noun), then it enables the action of trusting (verb), or believing, in the object of trust. It remains unclear, though, which arose first – the emotional attitude or the belief. For, it could be argued that to cultivate the emotion, belief of some rudimentary form may have been first necessary. The belief, in this instance, would be an offering – and if the response is favourable, then the belief is transmuted from an offering into a future emotional as well as rational orientation. Either way, belief and emotion are not so easily separated in theory or in practice.  

• Psychologists, like philosophers, seem to think that trust is both cognitive (involving reasoned belief) and affective (involving the arising of emotion), Both of these two aspects appear to  be implicated in the definition provided by Rousseau et al. (1998) who define trust as a “psychological state comprising the intention to accept vulnerability based on positive expectations of the intentions or the behaviour of another” (Rousseau et al., 1998). Again, it is unclear which comes first – the psychological state or the positive expectations. Stated differently, rational trust (reasoned belief) can pave the way for feelings of trust (an arising emotion) and emerging feelings of trust can pave the way for reasoning based on trust (Castelfranchi & Falcone, 2020).

• We might say that for philosophers and psychologists, the matter of trusting one’s own self is still a properly relevant matter for inquiry, perhaps even of first-order importance before the other can enter the picture. For sociologists, however, the other is always already present and a relational perspective to that other is paramount for defining trust. And therefore, for sociologists, trust is always already an attribute of a social relationship (Cook & Santana, 2020). Cook, Hardy and Levi (2005) note that “trust exists when one party to the relation believes the other party has incentive to act in his or her interest or to take his or her interest to heart”. According to this account, trust in a social relationship is predicated upon the reasoned belief that the trustee has the incentive to act a certain way. These incentives presuppose a commitment to maintaining the relationship over time and a concern for securing a reputation as trustworthy (Cook & Santana, 2020).

We see that in all the above cases, reason and emotion are both grounds for trust, but they are not independent of each other and there is no telling which arises first. The confusion, as we said earlier, may be traced to the dual nature of the word. As Goodchild (2021) argues, it may, therefore, be impossible to speak of the true grounds for trust without implicating trust itself, and that would make the definition of trust circular – to act with trust is to trust that which is believed to be trustworthy. This seems to be, in different guises, the effective definition being offered by the different academic disciplines surveyed above.  

Defining Trust – A Way Forward

While tracing the true grounds of trust is difficult, a more feasible alternative would be to ask what the proximate grounds for trust could be, under conditions of missing trust. This, indeed, is a very practical question, concerning two or more actors who are called upon to relate to each other, and it is the approach taken by most of the policy discourse on digital trust. A good example is CIIE (2021), which derives the enablers of trust (or what we are calling the grounds for trust) in DFS as solutions to overcome the ever-present potential for mistrust (or distrust) in DFS.

A lack of trust could prevail owing to several situational factors. For instance, the environment will typically contain substantial elements of radical uncertainty (or contingency). Or there could be a power asymmetry between the two actors, as the psychological and sociological definitions appear to indicate.  And so on. There is, however, one gesture on the part of each actor that is common to all of these situations, and that gesture is a looking to the future, and an anticipation or expectation about the other’s actions after time has elapsed. To trust under conditions of missing trust is to call upon something that can become the basis for this anticipation or expectation, and that something is what we are calling the proximate grounds for trust. According to Goodchild (2021), these have been contingent and empirical throughout human history: “familiarity, ancestry, ritual, miracle, prophecy, scripture, experience, authority, tradition, property, character, intuition, law, money, force, evidence and need, for example.” It is debatable, however, as to whether these grounds enable the offering of trust as a choice or as an obligation. As Goodchild (2021) puts it – “As temporal, social and dependent beings, humans are obliged to trust in order to pass from moment to moment, to abide in relationships, and to reap opportunities from circumstances.”

Trust in DFS

In a perfectly competitive market, with an infinity of buyers and sellers facing each other, the trust enacted in a particular exchange between a particular buyer and a particular seller can be seen as arising from a choice on the part of each actor. The context, however, that we wish to explore is not one of perfect competition – the market for DFS for the poor is an overwhelmingly lop-sided market, with orders of magnitude fewer sellers in relation to buyers. Therefore, the trust that any poor buyer reposes in any particular seller of DFS is born more out of obligation than out of choice. Conversely, because each side of the market is required to trust the other, this means that the sellers of DFS can trust the poor buyers from the vantage point of choice rather than one of obligation.

Stated differently, necessity could be one of the proximate grounds of trust for the poor customer while opportunity is the proximate ground of trust for the DFS provider. The DFS provider has a superior capacity to make distrust more salient in their decision to engage with a poor customer. Distrust becomes more salient in two respects. On one hand, the DFS provider can require the poor customer to prove their trustworthiness in a more exacting way. On the other hand, poor customers have little means to assess the trustworthiness of DFS providers. Further, the existence of untrustworthy players or untrustworthy actions by seemingly trustworthy players adversely impact these customers. A caveat to consider here is that while a certain amount of necessity may be involved in the decision to participate in the DFS market, the degree of this necessity is likely to be different across services.

What then would it mean for poor customers to properly trust DFS in practical, concrete terms? What would the grounds of trust look like? We take this up in the second part of the series.

References

Avendus. (2023). MSME Lending: Unlocking potential, Realizing dreams. https://www.avendus.com/crypted_pdf_path/msme-lending-report-formattedvf-img-642a719b97ccc-.pdf

Castelfranchi, C. & Falcone, R. (2020). Trust: Perspectives in Cognitive Science. In J. Simon (Ed.), The Routledge Handbook of Trust and Philosophy. Routledge.

Clément, F. (2020). Trust: Perspectives in Psychology. In J. Simon (Ed.), The Routledge Handbook of Trust and Philosophy. Routledge.

Cook, K., & Santana, J. (2020). Trust: Perspectives in Sociology. In J. Simon (Ed.), The Routledge Handbook of Trust and Philosophy (pp. 189–204). Routledge.

Cook, K. S., Levi, Margaret., & Hardin, R. (2005). Cooperation without trust? Russell Sage Foundation. https://www.jstor.org/stable/10.7758/9781610441353

Demirgüç-Kunt, A., Klapper, L., Singer, D., & Ansar, S. (2022). The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19. https://www.worldbank.org/en/publication/globalfindex

Goodchild, P. (2021). The Metaphysics of Trust: Credit and Faith III. Rowman & Littlefield Publishers.

Harihareswara, N., Miller, H., & Deb, A. (2021, July 28). India May Not Have As Much Digital Financial Inclusion As It Seems. Centre for Global Development. https://www.cgdev.org/blog/india-may-not-have-much-digital-financial-inclusion-it-seems

Keren, A. (2020). Trust and Belief. In J. Simon (Ed.), The Routledge Handbook of Trust and Philosophy. Routledge.

Lahno, B. (2020). Trust and Emotion. In J. Simon (Ed.), The Routledge Handbook of Trust and Philosophy. Routledge.

Manrai, R., Goel, U., & Yadav, P. (2021). Factors affecting adoption of digital payments by semi-rural Indian women: extension of UTAUT-2 with self-determination theory and perceived credibility. Aslib Journal of Information Management, 73(6), 814–883. https://www.emerald.com/insight/content/doi/10.1108/AJIM-12-2020-0396/full/html

Pazarbasioglu, C., Mora, A., Uttamchandani, M., Natarajan, H., Feyen, E., & Saal, M. (2020). Digital Financial Services. https://pubdocs.worldbank.org/en/230281588169110691/Digital-Financial-Services.pdf

Reserve Bank of India. (2022, August 2). Financial Inclusion Index for March 2022. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54133

Rousseau, D. M., Sitkin, S. B., Burt, R. S., & Camerer, C. (1998). Not So Different After All: A Cross-Discipline View Of Trust. Academy of Management Review, 23(3), 393–404. https://doi.org/10.5465/amr.1998.926617

Yan, C., Siddik, A. B., Akter, N., & Dong, Q. (2021). Factors influencing the adoption intention of using mobile financial service during the COVID-19 pandemic: the role of FinTech. Environmental Science and Pollution Research, 30(22), 61271–61289. https://doi.org/10.1007/s11356-021-17437-y

Yiga, C., & Cha, K. J. (2016). Toward understanding the importance of trust in influencing Internet banking adoption in Uganda. Information Development, 32(3), 622–636. https://doi.org/10.1177/0266666914563359

Cite this blog:

APA

Ghosh, I., Ashraf, H., & Kulkarni, A. (2023). Is lack of trust keeping customers away from digital financial services? Understanding the contours of trust. Retrieved from Dvara Research.

MLA

Ghosh, Indradeep, Hasna Ashraf and Amol Kulkarni. Is lack of trust keeping customers away from digital financial services? Understanding the contours of trust. 2023.

Chicago

Ghosh, Indradeep, Hasna Ashraf, and Amol Kulkarni. 2023. Is lack of trust keeping customers away from digital financial services? Understanding the contours of trust.

Read the policy brief here.

The importance of user-centric grievance redress mechanisms (GRMs) in creating user-forward products or services cannot be overstated. A well-designed GRM allows users to voice their complaints and seek redress when their expectations are not met with or when they experience harm. It instils confidence in users and demonstrates the provider’s commitment to addressing their issues effectively. Moreover, GRMs can serve as user support systems, helping users navigate services and improve their overall experience. Additionally, analysing grievances received through GRMs can provide valuable insights to providers, enabling them to improve their services and better meet users’ needs. This research presents a framework comprising nine principles, which we believe are pre-requisites for creating user-centric GRMs. In addition to the 9 principles, the framework contemplates design features bring the principle to life. Consequently, the framework is a combination of 9 principles and a checklist of 61 design features that together guide the creation of user-centric GRMs. This checklist aims to assist public and private providers, and other organisations to create user-centric GRMs or evaluate the user-centricity of their existing grievance redress channels. The questions in the checklist lend themselves to binary responses. However, the objective of this checklist is to not elicit quantifiable scores, but a rich description of the CGRM to contemplate the interventions that may be required and appropriate for a given provider’s context. While using the checklist, positive responses to the design features indicate user-centricity, while negative responses to the same indicate user-centricity gaps. However, the authors still recommend that evaluation framework be considered as qualitative given that some design features warrant qualitative responses, and that the risk of overlooking the rationale behind some design choices may persist.

The nine principles that constitute the framework for designing user-centric GRMs include accessibility, seamlessness, proactive communication, cost-effectiveness and timeliness, personal data protection, objectivity, independence in the operations of the GRM, accountability of the GRM and capacity building.

The principle of accessibility emphasises the importance of ensuring that users can easily approach the GRM. Select design features that support this principle include raising awareness about the existence of grievance channels, providing comprehensible information about the complaint registration process through multimedia channels, and adapting communication methods to ensure this information reaches the most marginalised users.

The principle of seamlessness focuses on designing a frictionless process for registering complaints. This principle emphasises that the complaint registration be as easy for the user as possible. Therefore, it discourages the user having to expend effort in recognising the party against which complaint needs to be lodged. This can be a complex assessment for the user, given the multi-party nature of digital transactions. One method to operationalise this principle is to create a unified, one-stop front-end for the customer to lodge complaint against any party. The assessment to determine the appropriate counterpart for seeking recourse can be left to technology, instead of the user. Thus, suite of features such as a unified channel for grievance registration complemented by a technology-driven back-end mechanism for routing complaints to relevant entities, automation of processes and complaint escalation can help give effect to this feature.

Proactive communication as a principle emphasises the importance of proactively updating users along their redress journey and providing clarity on the redress process. Design features such as providing immediate acknowledgements with unique reference numbers, informing users of expected processing times and response mediums, and offering ongoing updates on the progress of complaints through users’ preferred channels of communications aid this principle.

The principle of cost-effectiveness and timeliness highlights the importance of designing GRMs that are quick, easily navigable, and efficient, reducing both time and money costs for users seeking redress. Some design features that help realise this objective include making the GRM free to use, not imposing thresholds regarding the amount in dispute, and any limitation period for filing the complaint. It also explores the use of interactive and deeply embedded instant messaging services or social media for filing complaints, particularly for smartphone users. Utilising such services can significantly reduce the time and cost involved in accessing a GRM for the users.

The principle of personal data protection emphasises the need to institute standards and practices that preserve the confidentiality of the personal information submitted by the users. This principle can be upheld by adhering to data protection principles, communicating data protection practices to users through a privacy policy, and maintaining a robust data security infrastructure.

The principle of objectivity highlights the significance of extending similar treatment to similar complaints, consistently over time. It emphasises the importance of establishing and following redress protocols for different complaint categories and preventing bias or inconsistencies in complaint resolution. Clear, consistent, and pre-defied protocols for complaint resolution enhance users’ satisfaction and trust in the complaint redressal process.

The principle of independence in the operation of the GRM advocates for functional independence from other internal departments or external offices of other organisations. It stresses the need to ensure that the GRM remains free from undue pressure or incentives that may compromise its independence or objectivity. Design features such as isolating GRM personnel from conflicting positions within the organisation are recommended to ensure independence.

Accountability as a principle focuses on the GRM making itself answerable for its performance and devising best practices to improve it further. Typically, it involves implementing protocols and collecting metadata on their performance metrics to ensure the GRM’s adherence with established procedures and identifying gaps in the GRM’s functions. It mandates the GRM to furnish reports on its operations to industry bodies or regulatory authorities, and the wider public.

Finally, the principle of capacity building emphasises active feedback collection and its analysis to improve the GRM and the wider ecosystem. Actively seeking feedback from users to appreciate the difficulties they face, users’ suggestions on improving grievance redress processes, and taking targeted actions based on recurring feedback can aid building the capacity of the GRM as well as the wider ecosystem to which it belongs. Further, user surveys, one-on-one conversations with them, are recommended to elicit user feedback which can help improve overall performance of the GRM. A systematic analysis of user-grievances enables the GRM to gain insights about recurring user issues and relay those to the other participants of the industry such as fellow service providers and regulators. Consequently, by actively working on these issues, the industry’s capacity is enhanced.

While these principles and design features may not be exhaustive, they provide a starting point for imagining user-centricity of grievance redress channels for a wide range of providers. This framework must also be treated as material for referencing the different principles of user-centric GRMs. Accordingly, not all design features listed under the abstract principles may apply to each sector or provider. Evaluators may nuance this framework to suit the nature of the GRM being evaluated.

This is not a quantitative framework where numerical values can be assigned against the different questions of the principles, but a qualitative understanding of the GRM’s existing features and gaps where they may be present. Where gaps are identified, this design framework can also be used to provide recommendations to the GRM for their improvement and compliance with best global practices. While this tool is intended to provide an ex-ante framework for designers of GRMs for a given organisation, enclosed is also apost-diagnostic checklist tool for evaluators to assess the performance of pre-existing GRMs.

Read the policy brief here.

Cite this brief:

APA

Singh, A., Chugh, B., & Prasad, S. (2023). Designing a User-centric Grievance Redress Mechanism (GRM): A Sector-agnostic Checklist. Retrieved from Dvara Research.

MLA

Singh, Anubhutie, Beni Chugh and Srikara Prasad. “Designing a User-centric Grievance Redress Mechanism (GRM): A Sector-agnostic Checklist.” 2023. Dvara Research.

Chicago

Singh, Anubhutie, Beni Chugh, and Srikara Prasad. 2023. “Designing a User-centric Grievance Redress Mechanism (GRM): A Sector-agnostic Checklist.” Dvara Research.

Rakshith S. Ponnathpur & Nitin Vishen

Abstract

Governments and lenders provide loan moratoria to help struggling borrowers, particularly during an economic crisis. While it can provide relief to borrowers, such a policy also has a possibility of inducing moral hazard among the beneficiaries. But it is difficult to segregate the effects of the crisis itself from that of moratorium as a relief measure, on loan repayment behavior. In this paper, we use an unanticipated announcement of lockdown to curb the spread of Covid-19 in India on March 25th 2020 to estimate the impact of moratorium on loan repayment behaviour. The Reserve Bank of India announced a moratorium on March 27th 2020, on payment of all loan instalments falling due between March 1, 2020, and May 31, 2020. Borrowers whose loans were due in the last week of March 2020, i.e., between March 25th to 31st, 2020, but were not able to repay due to lockdown restrictions, thereby availed the moratorium during March 2020. Whereas borrowers whose installment due dates were between March 1st-24th, 2020, and had already repaid their installments before the lockdown, could only avail the moratorium from April 2020 onwards. We use this arbitrary date cut-off imposed by the announcement of lockdown for the identification of causal impact of one extra month of moratorium on borrowers’ loan repayment behavior post the moratorium. We find that an extra month of moratorium led to a 6.4 percentage point higher monthly default rate and a 2.5 percentage point higher Non-Performing Assets (NPA) classification rate among borrowers after the moratorium. We also find an additional month of moratorium led to a higher NPA classification rate among individual loan borrowers (5.6%) compared to joint-liability group loan borrowers (2.4%) who are peer-monitored, suggesting moral hazard could explain the observed borrower behaviour post the moratorium.

The full paper is available here.

Cite this paper:

APA

Ponnathpur, R. S., & Vishen, N. (2023). Does moratorium affect loan repayment behaviour? Retrieved from Dvara Research.

MLA

Ponnathpur, Rakshith S. and Nitin Vishen. “Does moratorium affect loan repayment behaviour?” 2023. Dvara Research.

Chicago

Ponnathpur, Rakshith S., and Nitin Vishen. 2023. “Does moratorium affect loan repayment behaviour?” Dvara Research.

Abstract

Gig platforms have become ubiquitous in urban India in recent years. According to NITI Aayog, India currently has about 7.7 million gig (platform) workers, a number that it expects will reach 24 million by 2030. Even as gig economy blooms, there are growing protests by gig workers about their working conditions, low pay, and lack of basic social security, prompting academics from various disciplines to closely study the gig (platform) economy. However, one gap in this rapidly expanding field of literature is regarding their financial lives. Our study aims to fill this gap by documenting the nature of platform work and how it is shaping the (financial) lives of platform workers and their families. Through a mixed methods approach that included focus group discussions, personal interviews, baseline surveys, and financial diaries, we gather insights from about 35 platform workers working with more than eight platforms in Bangalore – and coming from different age groups, genders, domicile statuses, platform segments ­­– about their experience(s) working with platforms, their earnings, expenses, cashflows, savings, borrowings, pension, insurance, time-use, past work, future work, financial goals, etc. 

We find that as platforms have established themselves and grown to become monopsonies in the labour market, platform workers’ experience with platform work has worsened, earnings reduced, benefits discontinued, while more costs and risks have shifted on their shoulders. Workers find it challenging to sustain such costs and maintain their household finances and therefore resort to taking loans way more frequently than they set aside any savings. Platforms, by virtue of being monopsonist, also have the power to design the payment structure in a way that compels workers to stay available and seek work for long hours. This is done mainly through incentives that form a substantial part of earnings and are conditional on the intensity of workers’ engagement with platforms. But workers are not guaranteed to earn incentives despite putting in all the effort from their end, thus making their incomes volatile. An ever-expanding pool of platform workers and fluctuating customer demand force them to constantly stay hyper-vigilant and compete for jobs with fellow workers, adding further to their physical and mental stress and exacerbating their day-to-day income volatility. Many consider platform work as unsustainable in the long run and have set goals for their future outside the platform economy, with most of them preferring some or the other form of self-employment. But they find it difficult to work actively towards reaching those goals, given the day-to-day challenges of their work and money management. Despite the many challenges faced in and complaints about platform work, workers continue – and aspiring workers are flocking – to work in the platform economy for the time being because there is a lack of alternative employment avenues currently in the Indian labour market that can guarantee them comparable earnings for their level of education and skills.

For more detailed insights on the lives and finances of gig workers, read the executive summary and full report.

Cite this report

APA

Ponnathpur, R., & Ramachandran, R. (2023). The financial lives of platform workers: A diaries study in Bengaluru, India. Retrieved from Dvara Research.

MLA

Ponnathpur, Rakshith and Risha Ramachandran. “The financial lives of platform workers: A diaries study in Bengaluru, India.” 2023. Dvara Research.

Chicago

Ponnathpur, Rakshith, and Risha Ramachandran. 2023. “The financial lives of platform workers: A diaries study in Bengaluru, India.” Dvara Research.

The Data Security Council of India[1]

Customers’ personal data has become central to how financial service providers (FSPs) (i.e., regulated entities and intermediating service providers) deliver their services. Processing personal data is helping FSPs better assess customers’ needs and provide more amenable financial services. However, FSPs can put customers’ safety at risk from different kinds of harm if they process data without adequate data protection safeguards.[2] The potential for these risks breeds mistrust and apprehension about FSPs and financial services among customers unless they are reassured of safety.

Many data protection frameworks provide a set of principles that are meant to guide providers towards implementing safeguards. However, these principles are often abstract and difficult to put into practice. More importantly, these principles don’t guide providers towards implementing safeguards in a way that earns the customers’ trust.

To address these gaps Dvara Research, with the Data Security Council of India (DSCI), co-developed two privacy handbooks directed at FSPs in the insurance and banking sector. The handbooks help FSPs implement data protection in a customer-centric manner throughout the data lifecycle, including in legacy systems. The handbooks build on global data protection frameworks and best practices, and inputs from FSPs, data protection experts, and other stakeholders in the insurance and banking sectors.

While the handbooks are set in the context of insurance and banking sectors, the principles are broadly applicable to all FSPs that interface with customers and process their personal data. These privacy handbooks provide four crucial inputs to FSPs. They:

1. Provide a set of principles and detailed action points for FSPs to implement data protection safeguards at each stage of the customer journey and data lifecycle in a way that builds customers’ trust.

2. Present a ready-to-use self-assessment checklist that FSPs can use to identify the gaps in their framework and understand how they can address them to better comply with regulatory guidelines and globally recognised data protection principles.

The privacy handbooks, along with an overview of each handbook, are available here. We welcome feedback from financial sector providers, data protection and data security practitioners, and customer protection experts towards improving the handbook

[1] The authors from the DSCI team include Varun Sen Bahl (affiliated with Nasscom at the time of publication), Anisha Koshy (affiliated with DSCI at the time of publication), and Anand Krishnan (affiliated with the CSSF India Cyber Program at the time of publication).

[2] Data Justice Lab, Data Harm Record, 2020, https://datajusticelab.org/data-harm-record/.

There is an appreciation of informed consent being a necessary (even when insufficient and somewhat imperfect) tool for personal data protection. Ideally, informed consent would make customers aware of how various service providers would use their personal data. This active information can help customers hold the providers to account and seek justice in case of deviation.

Building on this intuition, the Reserve Bank of India set out the Guidelines on Digital Lending (2022) and their Master Directions on NBFC-Account Aggregators (AAs) (2016). Both these policies require that consent obtained by these financial service providers (FSPs) be explicit, prior, and revokable. 

Yet, literature on customers’ experience of consent suggests that customers do not read through consent screens. Even when a small minority do, they find them incomprehensible. This is further accentuated by the ‘shrink-wrap’ nature of consent screens as they exist today. There is no scope to seek clarifications or reject some terms and conditions in part. This difficult-to-read and non-negotiable nature of consent is often cited as the reason for low customer engagement with consent screens.

However, as discussed in the previous blogs in this series, behavioural factors play an equally important part in active disengagement of the customers with consent screens. This blog links to a behavioural study conducted jointly by Dvara Research and Final Mile to uncover mental models that may nudge customers to disengage with consent screens. The study has been conducted in the context of a lending use-case via the Account Aggregator system. The attached deck sets out the method and key findings of the study. The findings are also summarized below for a quick reference:

While applying for a loan via an Account Aggregator, customers may disengage and passively comply with consent for the following reasons:

Cite this blog:

APA

Final Mile, Dvara Reasearch (2023). How mental models interplay with consent: Unpacking challenges to informed consent. Retrieved from Dvara Research.

MLA

Dvara Research and Final Mile. “How mental models interplay with consent: Unpacking challenges to informed consent.” 2023. Dvara Research.

Chicago

Dvara Research and Final Mile. 2023. “How mental models interplay with consent: Unpacking challenges to informed consent.” Dvara Research.

Social engineering ploys, where unsuspecting customers are manipulated into authorising fraudulent transactions are a serious customer protection concern. Regulators and financial institutions are investing effort in designing awareness campaigns in the form of TV commercials (TVCs) to raise awareness about fraudsters and their tactics with the objective of reducing customers’ tendency to engage with them. There is also a growing support for using outcome-based surveys (OBS) to test the effectiveness of such TVCs. Simple surveys that gather evidence on reported behaviour fall short of measuring effectiveness given that individuals depart from rational behaviour under the influence of behavioural biases. Consequently, OBS that gather evidence on change in behaviour are better suited to gauge the effectiveness of awareness campaigns.

This study presents the design of an OBS crafted to evaluate the effect that UPI-fraud-awareness campaigns have in reducing individuals’ propensity to engage with fraudulent communication. Leaning on behavioral science and market research literature, this OBS measures the effectiveness of the awareness campaign along 4 dimensions: recall, i.e., the ability of the individual to remember the central message of the campaign, long after watching it, appeal, i.e., the extent to which individuals relate to the campaign, comprehension, i.e., the ease with which individuals understand the central message of the campaign and absorb it, finally, impact, i.e., a decline in individuals’ tendency to engage with suspicious communication (messages, links, apps among others).

Insights from the OBS reveal respondents’ preferences for TVCs with relatable characters and simple messages in a storytelling format. Such TVCs fare better on recall, appeal, and comprehension. The pilot also demonstrates that heightened awareness may not always translate into changed attitude. Awareness campaigns that solely emphasise conveying information or urging the public to improve their behaviour may disregard the inherent irrationality of human behaviour. Additionally, these campaigns often prioritise technical details about an issue rather than promoting self-awareness among their audience. To address this, awareness campaigns can be designed to acquaint viewers with their behavioural biases, which can make them vulnerable to social engineering tactics, thus fostering self-awareness. Moreover, these campaigns can provide guidance on avoiding or mitigating the impact of emotional states (‘hot states’), which would positively influence the emotional aspect of attitudinal change and significantly enhance the effectiveness of the awareness campaigns.

The full policy brief can be accessed here.

Cite this policy brief:

APA

Chugh, B., & Narang, L. (2023). Are Fraud-awareness Campaigns Effective? Retrieved from Dvara Research.

MLA

Chugh, Beni and Lakshay Narang. “Are Fraud-awareness Campaigns Effective?” 2023. Dvara Research.

Chicago

Chugh, Beni, and Lakshay Narang. 2023. “Are Fraud-awareness Campaigns Effective?” Dvara Research.

Read the full report here.

MFIN India and Dvara Research partner to gather insights on users’ experience of navigating the MFIN-Customer Grievance Redress Mechanism (MFIN-CGRM). The study deploys mixed methods — a primary survey of over 300 users, stakeholder interviews and desk research to understand the user-centricity of the MFIN-CGRM. The concept of user-centricity is anchored in nine attributes of Accessibility, Seamlessness, Proactive Communication, Cost-effectiveness and Timeliness, Personal Data Protection, Objectivity, Independence in the Operation of the GRM, Accountability of the GRM and Capacity Building. These attributes together comprise Dvara Research’s framework for designing user-centric grievance redress mechanisms.

The study finds that the MFIN-CGRM demonstrates an incisive understanding of the lived context of its user base. This is manifest in the simple, costless, multilingual, toll-free phone-based channels to access the CGRM. The registration process appears simple, without undue procedural complications or the tendency to collect excessive data and accepts complaints regardless of how old they might be. Most users report being able to register complaints in one attempt and few hesitate in airing grievances on account of a backlash for doing so. Where users are unaware of the procedure, the MFIN-CGRM expends a sizeable effort in familiarising users with it. It also maintains provisions to fast-track critical complaints. Further, when grievances against a particular provider surge, the CGRM escalates the matter to the Enforcement Committee which may take disciplinary actions against the provider. These disciplinary actions are also reported to the RBI, over and above the quarterly reports that the MFIN-CGRM furnishes with the RBI. In addition to reporting to the RBI, the MFIN-CGRM also publishes annual reports in the public domain which share metadata on the trend of grievances and policy takeaways that surface from their analysis.

To further bolster user-centricity, the MFIN-CGRM may consider focussing on five key aspects.

First, there appears to be a gender gap in the access to the CGRM. Even when most MFI customers are women, most callers are male. This merits further investigation. Second, there is scope to complement the toll-free phone-based CGRM with instant message-based channels such as WhatsApp. These channels are now embedded in the daily lives of users and receive high engagement from them. They can also double up as channels to disseminate information to the users and elicit feedback from them. Third, contingent on the call volumes rising in the future, the MFIN-CGRM may consider adopting technology  that would enable it to direct callers to relevant venues of grievance redress. When callers need to be redirected to the provider MFI GRM, MFIN may consider being able to transfer them directly or even auto-escalate the complaint to the RBI-IO on behalf of the user. Developments in ODR have led to availability of softwares that offer these functionalities and substantially reduce the burden on the user. Fourth, the MFIN-CGRM can better serve users by proactively, voluntarily, and timely communicating with them. Currently, all communication barring post-resolution verification calls, is initiated by the user. The instant message-based service over SMS or internet-enabled providers can prove to be effective in this regard. Finally, MFIN-CGRM may consider communicating its data protection policies more actively with the user and plug gaps in data protection practices. These recommendations are discussed in considerable detail in this brief. Overall, judicious use of technology and social media can enhance the user-centricity of the MFIN-CGRM.

Read the full report here.

[1] The authors thank Srikara Prasad and Shreya Ravi for their contributions to the project and its related research.

Cite this report:

APA

Singh, A., & Chugh, B. (2023). Unpacking user-centricity of the MFIN Customer Redress Mechanism (MFIN-CGRM). Retrieved from Dvara Research.

MLA

Singh, Anubhutie and Beni Chugh. “Unpacking user-centricity of the MFIN Customer Redress Mechanism (MFIN-CGRM).” 2023. Dvara Research.

Chicago

Singh, Anubhutie, and Beni Chugh. 2023. “Unpacking user-centricity of the MFIN Customer Redress Mechanism (MFIN-CGRM).” Dvara Research.

Deepti George is the convenor for the Special Committee of C20 on Financial Issues as part of India’s 2023 Presidency of the G20. Civil20 (C20) is one of the official Engagement Groups of the G20 that provides a platform for Civil Society Organizations (CSO) around the world to voice peoples’ aspirations to the world leaders at G20. It gives CSOs a forum to protect the agency of this sector, reflect on the primary and common concerns affecting it, and to promote social and economic development with the vision of leaving no one behind. Below is a submission to the Independent Expert Group from the C20.

The SDG Agenda, the sovereign debt crisis and the climate crisis will need brave leadership from not just individual governments of both the global north and the south, but also groups such as the United Nations, the G20, G7 and others, to closely negotiate tough decisions that can have enough impact on the triple inequality – of wealth, carbon and power. For this, the Multilateral Development Banks (MDB) are unique in that they bring with them the firepower and balance sheet size to back big- budget funding needs on the back of the above tough decisions that need to be made. Given their multilateral ethos, they are also uniquely placed to fund solutions for global public goods in a systematic and in a least-conflicted manner. However, their history and their organizational decision- making mechanisms may make these institutions too unwieldy to deliver solutions in time to have high impact for the entire planet. An inability to deliver this imperative will be catastrophic – as this would see a global rise in humanitarian and ecological disasters, and the emergence of more regional efforts that will likely prioritize regional interests over solving for problems of a global nature, and distinctly ‘zero-sum’ interactions between countries that will leave the planet and its people worse off. This also will indicate a decline in the global relevance of the MDBs themselves. Such a scenario is imminent given many countries are being pushed towards choosing between two divergent paths – whether to collaborate, including via multilateralism and its rule-based frameworks, or whether to embrace ‘economic decoupling’ in order to achieve greater risk mitigation for themselves¹.

Click here to read the full article.

The article can also be accessed from this site.

1. “The stark de-risking choice facing economies”, Mohamed El-Erian. Financial Times, May 25, 2023

Summary:

Managed competition is a theoretical concept for designing and regulating health insurance systems. Such systems can secure consumers’ interests by managing diverging incentives, instituting uniform regulations, equipping consumers to make informed choices, and creating a competitive environment tailored to rewarding those organisations that improve services to consumers. In this paper, we draw lessons from the Netherlands, Israel, Germany, and Colombia that can inform policymakers considering health system reform for universal health coverage. Country experiences with managed competition in their health systems yield crucial lessons for adopting the concept in India beginning with experimentation in sub-systems that seek to cover the entire target population and ensure the provision of quality healthcare.

The full policy brief is available here.

Cite this policy brief:

APA

Nambiar, A., Ashraf, H., & Gupta, A. (2023). Designing Health Systems Based on Managed Competition. Retrieved from Dvara Research .

MLA

Nambiar, Anjali, Hasna Ashraf and Aarushi Gupta. “Designing Health Systems Based on Managed Competition.” 2023. Dvara Research .

Chicago

Nambiar, Anjali, Hasna Ashraf, and Aarushi Gupta. 2023. “Designing Health Systems Based on Managed Competition.” Dvara Research .