Financial Technology and Privacy: Evaluating the Approach to Consumer Data

Abstract

Riding on the back of advances in technological and digital innovation, increased consumer expectations and universal aspiration for financial inclusion, financial technology (“FinTech”) is rewriting the scope and roles of traditional financial methods and institutions. By leveraging key technologies such as application programming interface, distributed ledger technology, biometrics, and, especially, artificial intelligence, FinTech is fast becoming a way of life. From asset management to investing, lending, and payment, financial services are now more accessible and more affordable than ever. It is no wonder, then, that the FinTech sector has attracted some of the most significant investments in the past years. In 2018, African FinTech companies raised about $357 million, with startups in Kenya, Nigeria and South Africa accounting for the largest share. And then in 2019, major FinTech firms raked in over half a billion dollars in funding, with a number of Nigerian FinTech firms raising $360 million within a single month in a particularly impressive influx period. But while FinTech continues to thrive in Africa’s unique financial and economic ecosystem and continues to improve financial inclusion, certain concerns (chief of which is FinTech’s implications for privacy and data protection) brew in the background, and many consumers—and regulators—seem to be getting carried away on a wave of technological optimism. Meanwhile, privacy and data protection are core interests protected in many constitutions, major legislative documents, and international treaties—interests that FinTech may be abusing, to the detriment of the financial system.