Financial identity

These are policies that provide clients with a financial identity, by transforming their transaction history into a financial asset, which can be used to obtain access to credit and other banking services.

The lack of identification systems in many developing economies, and the existence of incomplete or competing identification technologies, pose barriers to the generation of financial identities. Consequently, regulatory frameworks need to adopt a flexible approach, facilitating information-sharing in the initial stages of development, and later introducing protective measures that focus on the possible risks of processing highly sensitive data, including fraud, data manipulation, or discrimination of certain groups.

As asymmetric information is a serious constraint in promoting financial inclusion, the creation of public or private credit bureaus that record positive information can serve as a complementary policy solution to improve credit information and to reduce the transaction cost of financial intermediation.