Consumer Fraud and Scams – The Dark Side of Financial Inclusion
By Dr. Kimmo Soramäki (Founder & CEO)
Last week, I spoke on three occasions about financial inclusion and the growing threat of fraud and scams. The sessions carried broadly the same title as this article. One was delivered in person per invitation from HiPipo at the Middle East and Africa Digital Transformation Summit in the culturally rich and beautiful city of Kampala, Uganda. The other two were online events hosted respectively by the Alliance for Financial Inclusion (AFI) and CEMLA, the association of central banks in Latin America and the Caribbean.
Over the past decade, financial inclusion has emerged as a key pillar of national development strategies and global cooperation. Institutions such as the World Bank, the G20, the Gates Foundation, and various regional development banks have supported national efforts to bring hundreds of millions of people, particularly in low- and middle-income countries, into the formal financial system.
The case for financial inclusion is compelling. It improves livelihoods, empowers women, increases resilience to economic shocks, and supports the digital transformation of governments and services. When people can access accounts, mobile wallets, and digital payments, they are better equipped to save, invest, and build more secure futures.
At the heart of this progress are real-time, low-cost payment systems designed for wide reach and interoperability. Platforms like India’s UPI, Brazil’s Pix, Indonesia’s BI-FAST, and Malaysia’s DuitNow have dramatically expanded access to financial services. Enabled by regulatory reform and national infrastructure, these systems process billions of transactions at minimal cost, allowing users to pay bills, receive remittances, and access services instantly. The results are tangible. In Indonesia, inclusive policies and BI-FAST have extended digital payments across the population. Malaysia has achieved near-universal account access and widespread QR payment use. In Colombia, digital wallets and interoperable low-value systems are connecting rural and informal communities. In each case, financial inclusion has moved from vision to reality.
Yet these same advances have also created new risks. As real-time systems scale and become part of daily life, they are increasingly targeted by fraud and scam networks. Criminal groups, both international and domestic, have discovered how to exploit the very populations these systems were meant to empower. Scams, from impersonation and phishing to investment fraud and romance schemes, have grown rapidly. They prey on the speed of instant payments and the limited experience many users have with digital channels.
In many countries, fraud losses have now overtaken other forms of financial crime. One of the most serious problems is that existing defenses remain fragmented. Most are designed and operated at the level of individual banks or payment service providers. While one institution may detect suspicious activity, it cannot follow funds as they move through the system. By the time a fraud case is identified, the money has often been passed through several accounts, withdrawn, or moved across borders.
This creates a troubling paradox. The systems built to support inclusion are also being used to strip newly banked individuals of their savings. When people experience fraud and cannot recover their losses, trust in the formal financial system quickly erodes. They may revert to cash, avoid digital channels, or lose confidence in the institutions that were meant to protect them. This risks undoing years of progress.
To prevent this, financial authorities must act decisively. Consumer protection in the age of instant payments is not simply about bank-level security. It is about creating national capabilities that allow for coordinated, real-time responses to fraud. Countries that have invested in modern payment systems must now build equivalent investments in fraud prevention and recovery.
One example is Malaysia, where the government has established the National Scam Response Center (NSRC). This center brings together banks, the central bank, police, and other relevant agencies. Its work is supported by a National Fraud Portal, powered by FNA’s Money Trails platform, which enables real-time tracing of stolen funds across banks. Investigators can act within seconds to freeze accounts, identify mule networks, and recover stolen funds. The system has already led to significant recoveries and improved coordination across institutions. Other countries are beginning to take similar steps. In Indonesia, financial authorities are building integrated fraud reporting and tracing tools that can support the growing scale of digital transactions.
In each case, the leadership of central banks, regulators, and payment system operators is essential. These institutions are uniquely positioned to coordinate across the public and private sectors, define legal and data governance frameworks, and mobilize international support for early-stage investment. Where national funding is limited, development partners can play a vital role.
The goal of financial inclusion has never been just about access. It is about access that is safe, trusted, and sustainable. If scams are allowed to spread unchecked, those most in need will be the first to lose confidence. Countries that have led the charge for financial inclusion must now lead in building resilience. A national fraud utility that enables tracing, scoring, and a cross-institutional response is not optional. It is a critical next step in securing the digital financial future.
