[Federal Register Volume 79, Number 113 (Thursday, June 12, 2014)]
[Notices]
[Pages 33731-33735]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-13552]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
[Docket No.: CFPB-2014-0012]
Request for Information Regarding the Use of Mobile Financial
Services by Consumers and Its Potential for Improving the Financial
Lives of Economically Vulnerable Consumers
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Notice and request for information.
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SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB),
established under the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act), has as part of its mission to empower
consumers to take more control over their economic lives. The Bureau is
charged with promoting financial education, researching developments in
markets for consumer financial services and products, and providing
information, guidance, and technical assistance regarding the offering
and provision of consumer financial products or services to
traditionally underserved consumers and communities.
This notice seeks information about how consumers are using mobile
financial services to access products and services, manage finances and
achieve their financial goals with a focus on economically vulnerable
consumers. We use ``mobile financial services'' (MFS) in this Request
for Information (RFI) to cover mobile banking services and mobile
financial management services. The RFI does not address mobile point of
sale (``POS'') payments, except with respect to mobile payment products
that are targeted specifically for low-income and underserved
consumers, where it seeks to learn about how such targeting could
benefit or harm those categories of consumers. The information from the
responses will be used to inform the Bureau's consumer education and
empowerment strategies related to developments in these areas.
DATES: Comments must be received on or before September 10, 2014 to be
assured of consideration.
ADDRESSES: You may submit responsive information and other comments,
identified by Docket No. CFPB-2014-0012, by any of the following
methods:
Electronic: Email [email protected] or go to http://www.regulations.gov. Follow the instructions for submitting comments.
Mail: Monica Jackson, Office of the Executive Secretary,
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC
20552.
Hand Delivery/Courier: Monica Jackson, Office of the
Executive Secretary, Consumer Financial Protection Bureau, 1275 First
Street NE., Washington, DC 20002.
Instructions: Please note the number associated with any question
to which you are responding at the top of each response (you are not
required to answer all questions to receive consideration of your
comments). The Bureau encourages the early submission of comments. All
submissions must include the document title and docket number. Because
paper mail in the Washington, DC area and at the Bureau is subject to
delay, commenters are encouraged to submit comments electronically. In
general, all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public
inspection and copying at 1275 First Street NE., Washington, DC 20002,
on official business days between the hours of 10 a.m. and 5 p.m.
Eastern Standard Time. You can make an appointment to inspect the
documents by telephoning 202-435-7275.
All submissions, including attachments and other supporting
materials, will become part of the public record and subject to public
disclosure. Sensitive personal information, such as account numbers or
Social Security numbers, or names of other individuals, should not be
included. Submissions will not be edited to remove any identifying or
contact information.
FOR FURTHER INFORMATION CONTACT: For general inquiries, submission
process questions or any additional information, please contact Monica
Jackson, Office of the Executive Secretary, at 202-435-7275.
SUPPLEMENTARY INFORMATION: A major development in the consumer
financial services market over the past few years has been the
increasing use and proliferation of mobile technology to access
financial services and manage personal finances. For example, last year
74,000 new customers a day began using mobile banking services. Using a
mobile device to access accounts and pay bills can reduce cost and
increase convenience for consumers. By enabling consumers to track
spending and manage personal finances on their devices through mobile
applications or text messages, mobile technology can help consumers
achieve their financial goals. For the economically vulnerable, mobile
can enhance access to safer, more affordable products and services in
ways that can improve their economic lives.
Consumer use of mobile financial services and products--offered by
financial institutions, financial technology product developers and
providers--has increased over the past few years. According to the
Federal Reserve Board's most recent survey on mobile financial
services, 93 percent of mobile banking users used mobile banking to
check account balances or recent transactions and 24 percent of
smartphone users have used their phone to track purchases and expenses
during the preceding year. One third (up from 21 percent in 2011) of
mobile phone users and over half (up from 42 percent in 2011) of
smartphone users used mobile banking services. In the underbanked
population, however, a larger percentage of mobile phone users reported
using mobile banking (39 percent) in the previous 12 months (compared
to 17 percent for all phone users).\1\
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\1\ Bd. of Governors of the Fed. Reserve Sys., Consumers and
Mobile Financial Services 2014 (2014) available at http://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201403.pdf, at 1-4.
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Mobile financial services have been identified as having the
potential to expand access to more underserved populations.\2\ A large
percentage of unbanked and underbanked consumers, many of whom are low-
income, have access to mobile phones, a significant number of which are
smartphones--69 percent of the unbanked have access to a mobile phone,
half of which are smartphones; 88 percent of the underbanked have
access to a mobile phone, 64 percent of which are smartphones.\3\ A
majority of unbanked
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households are low-income (81 percent earn below $30,000) and a
substantial proportion of consumers in this income bracket (45 percent)
who use their mobile phone to access the Internet do so as their
primary way to access it.\4\
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\2\ See, e.g. Elisa Tavilla, How Mobile Solutions Help Bridge
the Gap: Moving the Underserved to Mainstream Financial Services,
December 2013 at 21-23 available at, http://www.bostonfed.org/bankinfo/payment-strategies/publications/2013/how-mobile-solutions-help-bridge-the-gap.html.
\3\ Mobile Financial Services Survey 2014, Id. at 1-2 (2014).
Note that in a recent White Paper, Susan Burhouse, Matthew Homer,
Yazmin Osaki, Michael Bachman, Assessing the Economic Inclusion
Potential of Mobile Financial Services,'' April 23, 2014 at 16
available at, http://www.fdic.gov/consumers/community/mobile/Mobile-Financial-Services-and-Economic-Inclusion-04-23-2014revised.pdf,
authors reported that in the 2013 FDIC Survey of Unbanked and
Underbanked Households (October 2014 forthcoming), 90 percent owned
a mobile phone, of which 71 percent are smartphones.
\4\ Id. at 18 (citing FDIC 2011 Household Survey and Pew
Research Center, September 16, 2013).
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Accessing financial products, services, and financial management
tools via mobile devices has the potential to empower consumers to take
more control over their financial lives, to increase savings and reduce
debt. Such use can:
Help consumers access financial services that meet their
needs. Whether provided by banks or nonbanks, mobile financial services
can enable consumers to access myriad products and services that they
may not be able to access due to location (not within their community),
cost or other barriers to access.
Make access to financial services less expensive for
consumers and incentivize providers. For example, bill payments, which
can be costly and time-consuming for consumers using cash, may be
cheaper, faster and easier using mobile.\5\ As acknowledged in a recent
White Paper from FDIC, ``[a]lthough there are short-term costs and
uncertainties associated with MFS, many industry reports indicate it
has potential to reduce the cost of providing banking services.'' \6\
One industry estimate cited in the White Paper calculated the average
cost of an in-branch transaction was $4.25 whereas the average cost was
$0.10 for a mobile transaction.\7\
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\5\ Tavilla, How Mobile Solutions Help Bridge the Gap, Id. at
12.
\6\ Susan Burhouse, Matthew Homer, Yazmin Osaki, Michael
Bachman, Assessing the Economic Inclusion Potential of Mobile
Financial Services, April 23, 2014 at 29-30 available at, http://www.fdic.gov/consumers/community/mobile/Mobile-Financial-Services-and-Economic-Inclusion-04-23-2014revised.pdf.
\7\ Id.
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Help with money management to help consumers increase
savings and reduce debt. Mobile presents a faster and easier way to
access products and manage money through various features such as
online account opening, checking account balances, account alerts,
faster funds transfer, remote deposit, and bill payment, which can
enhance the consumer's ability to save, pay bills on-time and more
cheaply. For example, in the Federal Reserve's Board 2013 survey, 69
percent of mobile banking users reported that they checked their
account balance before making a large purchase and half of them decided
not to make purchase as a result of their account balance or credit
limit.\8\
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\8\ FRS, Mobile Financial Services Survey 2014, Id. at 2, 19.
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Given the increasing use of mobile financial services \9\ and its
potential benefits, the Bureau seeks information on how mobile
financial services can be used to empower and address the financial
needs of consumers in affordable and safe ways. Specifically, we are
seeking information on:
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\9\ Javelin Strategy and Research, ``Mobile Banking, Tablet and
Smartphone Forecast 2013-2018: Smart Device Adoption Drives Mobile
Banking Boom in 2013'', March 2014 (95 million U.S. adults used
mobile banking--a gain of 27 million mobile bankers over 2012, or
74,000 per day). Accessed summary of report and blog at https://www.javelinstrategy.com/brochure/318/on May 23, 2014.
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1. The general use of these mobile financial services and the
opportunities this technology presents for addressing the needs of
consumers, with a focus on economically vulnerable populations,
including enhancing access to convenient financial services,
facilitating effective account management by consumers, and building
financial capability by creating increased ease in money management by
use of personal financial management mobile tools;
2. Barriers to low-income, underserved or economically vulnerable
consumers accessing and using mobile technology for financial services;
and
3. Potential consumer protection issues associated with the use of
such mobile technology for financial services by economically
vulnerable consumers.
The Bureau encourages comments from all members of the public,
including:
Individual consumers.
Community groups.
Consumer groups.
Groups addressing issues affecting specific populations,
including older Americans, people with disabilities, low-income,
underserved or economically vulnerable consumers, recent immigrant and
other groups.
Academics and other researchers.
Providers of financial services.
Financial institutions.
Providers and developers of mobile technology designed to
address financial services needs and personal financial management.
Payments providers.
Telecommunications firms.
Regulators.
Social service providers, particularly those that serve
low-income, underserved or economically vulnerable consumers.
When responding to any of the questions, for the product, service
or technology that is the subject of the response, please include
information about how it is rolled out or marketed to consumers; which,
if any, specific population it is targeting; how it is brought to
scale; and any challenges linking the product, service or technology to
its intended targeted population.
Mobile Financial Services (Mobile Banking and Mobile Financial
Management Services) To Enhance Access and Opportunities for Consumers
(1) What are some of the ways in which consumers use mobile
technology to access financial services? What are some of the benefits
to consumers of enhanced access via mobile?
(2) How would making access via mobile differ from or improve
overall access compared to only accessing financial services through an
online channel?
(3) Based on your experience, what percentage of customers access
accounts at financial institutions via mobile? Has there been any
research that sheds light on level of use by income strata, age, or
other demographic factors?
(4) Is there evidence of lower costs to service providers and/or to
consumers when providing mobile financial services? Identify how those
cost savings are achieved.
a. For which type of account or transaction does mobile reduce
cost? Why?
b. Are there examples of tracking cost savings when products were
made available via mobile or when consumers opt in to accessing
products and services via mobile?
c. Which products or services hold the most potential in terms of
reducing costs of delivery and distribution to underserved consumers
and communities? Please describe.
(5) How can mobile financial services be brought to scale in ways
that reach more consumers across the economic spectrum?
a. What are examples of financial services and products brought to
scale via mobile in ways that assist low-income consumers?
b. Are there actions the federal government can take to enhance
opportunities for providing services and products via mobile for
economically vulnerable consumers at scale?
c. What role can and should third-party retail agents serve in
providing financial products? Are there barriers that limit the ability
of financial institutions to use third-party retail agents to provide
mobile financial
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services? Does using third-party retail agents pose current and/or
future risks to consumers?
(6) How are financial service providers marketing mobile financial
services? To underserved populations?
a. What types of marketing or outreach methods, including
partnerships with nonprofits and other entities, have been effective in
increasing the numbers of underserved who use mobile financial
services?
b. What are examples of financial institutions using mobile devices
for their employees to engage in outreach or provide services to
underserved communities? What types of services can be provided
remotely by employees using mobile devices in communities, e.g.,
account opening, deposits, etc.?
(7) The 2014 FDIC White Paper identified that while MFS has the
potential to help the underserved gain access to the banking system,
MFS on a standalone basis appears to have a ``limited role in
motivating and facilitating the unbanked access to the financial
mainstream.'' \10\ Are there successful approaches to enhance access to
financial services for the unbanked, whether it is via bank or nonbank
providers?
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\10\ Burhouse, Assessing the Economic Inclusion, Id. at 3.
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Specific Types of Mobile Financial Products and Services, Including
Personal Financial Management Applications and Features
(8) Are there any examples of or research on the use of mobile
technology to enhance savings opportunities or habits for consumers?
For economically vulnerable consumers?
(9) Are there certain kinds of products or services that are more
promising than others in terms of being adapted to mobile environment
for the underserved market? Why?
a. Deposit products?
b. Point-of-sale transactions?
c. Paying for purchase of products and services remotely?
d. Bill payments?
e. Overall money management products, including apps that enhance
ability to manage money or set and meet financial goals?
f. Remote deposit capture (RDC)? \11\
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\11\ Remote deposit capture (RDC) as used here refers to ability
of consumer to deposit a check remotely by using the camera on a
mobile device.
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(10) Are there specific types of current or potential innovations
that have been identified by community groups, consumer advocates,
educators, or others as helpful to the underserved?
a. Could expansion of mobile help move consumers from higher-cost
products to lower-cost products? Please explain.
(11) How are loyalty and rewards programs being used for mobile
financial services? What are some innovative programs that may help the
underserved market: (1) Access more affordable financial services and
products, and (2) achieve their financial goals?
(12) Many low-income consumers use prepaid products for their daily
financial transactions. What opportunities are there for low-income
consumers to use these products via mobile devices?
(13) Are there examples of financial service providers,
individually or in partnership with intermediaries or third-party
agents, offering financial education or financial capability
interventions or tools as part of their mobile financial services
offerings? Have any of these efforts been shown to be effective in: (1)
Bringing more underserved consumers into mobile financial services; or
(2) enhancing the financial capability of underserved consumers to
reach their goals.
(14) Consumers can check account balances, use account alerts to
avoid fees or transfer funds, set aside funds for long or short term
goals. Some of these features provide convenience while others can help
track spending and manage money. What are examples of features offered
by mobile financial services designed to advance the financial goals of
consumers? What are some examples of successful use of features to
advance financial goals? Please explain.
(15) Given the significant level of cash usage within the low-
income population,\12\ are there mobile financial services or products
that enable consumers to use their cash to pay for goods and services
remotely?
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\12\ Barbara Bennett, Douglas Conover, Shaun O'Brien, and Ross
Advincula, Cash Continues to Play a Key Role in Consumer Spending:
Evidence from the Diary of Consumer Payment Choice, April 2014 at 10
(Figure 11--those living in households with less than $25,000 of
income used cash for 57% of their transactions) available at http://www.frbsf.org/cash/publications/fed-notes/2014/april/cash-consumer-spending-payment-diary.
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(16) Making payments for goods and services by charging them to
mobile phone bills has been suggested as a way for unbanked consumers
to be able to make electronic payments. What are the risks, if any, for
these consumers? What are potential benefits for the unbanked and
underserved?
Opportunities for Population Subgroups
(17) The following subgroups of consumers face unique challenges in
accessing financial products and services in ways that can improve
their ability to meet their financial goals. Please respond to the
questions for one or more of the individual subgroups.
Unbanked and underbanked.
Rural consumers.
People with disabilities.
Consumers with limited English proficiency.
Recent immigrants.
Underserved youth or ``opportunity youth'' (i.e., youth
between the ages of 16 and 24 who are neither enrolled in school nor
participating in the labor market).
People residing in traditionally underserved communities.
a. What are the barriers and challenges to using mobile to enhance
access that are specific to these groups of consumers?
b. What efforts have financial services providers, intermediaries,
or third-party agents and community groups undertaken to serve the
following groups of consumers via mobile?
c. Are there examples of current mobile financial services that
have been developed specifically to address the needs of these
consumers, or services that may specifically benefit these consumers,
e.g., Remote Deposit Capture (RDC)?
d. Are there examples of successes in reaching these consumers and/
or in helping these consumers reach their financial goals, and if so,
what has contributed to the success?
e. Are there additional consumer protections needed to address
unique risks or barriers faced by these groups? Explain and please
provide examples.
Challenges and Barriers To Expanding Use and Reach of Mobile Financial
Services, Particularly for Economically Vulnerable Populations
(18) Privacy and security concerns have been cited as reasons
consumers do not use mobile banking and mobile financial management
services. What are the specific types of privacy and security concerns?
What actions should consumers take to protect their information and
identity? Are there products, services or features that address these
concerns? What mechanisms should exist to disable use of stolen or
mislaid mobile devices that are enabled to provide financial services?
(19) What impediments are there to consumers opening a transaction
or
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savings account remotely via mobile or online?
(20) What types of customer service or technical assistance
concerns are there in the context of mobile financial services? For
example, should consumers always have access to a customer service
telephone number and/or call center?
a. What methods are used to ensure consumers know when transactions
are completed and funds available? Are additional methods needed?
b. Do customer service levels vary depending on the dollar size of
the mobile transactions?
(21) What are some of the distinct challenges for financial service
providers, including financial institutions, to offer mobile financial
services to economically vulnerable consumers? Please describe in terms
of these categories.
a. Technical, including technology and operational.
b. Regulatory.
c. Cost.
d. Marketing.
e. Other.
(22) What challenges and barriers exist for economically vulnerable
consumers to access mobile financial services?
a. Technological, including accessibility of devices and
telecommunications services.
b. Educational, including the level of understanding or knowledge
about using financial products and services via mobile.
c. Regulatory.
d. Security and privacy concerns related to accessing mobile
financial services, e.g., do lower cost platforms or devices carry less
security and privacy protections?
e. Costs, including cost of data plans.
f. Language barriers.
(23) What are the concerns, if any, related to access for
underserved consumers and communities if increased use of mobile
financial services results in fewer bank branches? Is there any
research on the impact on bank physical locations when a significant
number of customers use mobile financial services? Are there efforts to
expand branch reach by using mobile technology to provide branch
functions in the community, away from the branch? Please describe.
Consumers' Understanding of Risks Involved in Using Mobile Financial
Services and Steps To Protect Them
(24) Various groups representing consumers have identified risks to
low-income consumers when engaging in financial transactions via
mobile, lack of accountability for all entities involved in the
transactions, the ``single point of failure'' when consumers lose
access to their mobile device and cannot access their financial
accounts, possible move away from paper receipts or statements, and the
use of data in ways that may promote products that pose risk to low-
income consumers. What core principles would help ensure that
underserved consumers are protected when engaging in financial
transactions through mobile?
(25) Are there ways that financial management services or features
can be used to prevent fraud or theft? What type of information would
be helpful for consumers to know to avoid fraud or theft?
(26) Security concerns have been cited as a reason why some
consumers have decided not to use mobile banking. Are data breaches
more common with mobile financial services relative to online financial
services generally? Are they more common compared to traditional
channels, e.g., phone, ATMs?
(27) In terms of security with regard to accessing or transferring
financial data:
a. Are certain types of mobile devices less secure than others in
terms of transferring financial data?
b. Are certain types or levels of mobile services less secure than
others?
c. Is there greater risk of compromised or stolen information in
more remote areas where signals may be weaker?
d. How are consumers informed of risks associated with the types of
devices they may be using or the types of plans/services they may have?
(28) What risks does segmentation of the market through data
created by mobile use present for underserved consumers? Is there a
risk that data will be used to direct underserved consumers to higher-
cost products and services than they would otherwise be eligible to
purchase and that may pose greater risk of financial harm? Are low
income consumers less likely to detect hidden fees, and, if so, does
special attention need to be provided to the design of mobile payments
products targeted at low income consumers? Is there any research that
would help inform the data segmentation issue?
(29) What are the types of fraud risk that low-income consumers may
be exposed to when using mobile device to access financial services and
products? Is the risk greater or less via mobile compared to accessing
financial services online? Is the risk greater or less compared to
using credit and debit cards or other means to access financial
services? Please explain.
(30) Many low-income consumers use cell phones (phones without
operating systems).
a. How are financial services providers, intermediaries and third-
party agents using ``texting'' or other means to communicate with
consumers via cell phones?
b. What are the challenges and barriers to communicating through
``texting'' for financial services and products?
c. Are there additional protections needed that may affect
providers' ability to market or advertise to consumers via ``text''?
d. How have providers increased consumer use of text alerts? Please
describe.
(31) A significant percentage of low-income consumers mostly use
their phone to go online. Are privacy concerns different depending on
whether consumers access services online via a computer or via a phone
or mobile application? \13\
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\13\ Pew Charitable Trusts, Pew Research Internet Project,
``Cell Internet Use 2013'' (45% of cell internet users living in
households with an annual income of less than $30,000 mostly use
their phone to go online, compared with 27% of those living in
households with an annual income of $75,000 or more). Accessed
online at http://www.pewinternet.org/2013/09/16/main-findings-2/ on
May 23, 2014.
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(32) Are there unique challenges or risks associated with prepaid
phones (pay-as-you-go or monthly) when using them to access financial
services?
(33) Are additional financial consumer protections needed to
protect low-income or otherwise economically vulnerable consumers in
the use of mobile financial services? Please explain.
a. Are additional protections needed to protect consumers' access
to their financial accounts when they do not have access to their
device because of loss, theft or non-payment of cell phone bill?
b. Are there risks to consumers when third-party agents are used to
facilitate transactions or provide other products via mobile?
International Experience in Using Mobile Technology To Enhance Access
and Increase Financial Capability of Economically Vulnerable Consumers
It has been widely reported that mobile financial services are
being used successfully in other countries to increase access for low-
income consumers. These examples may shed light on how mobile
technology could be used in ways designed to improve account access,
use of safe and low-cost payments and the availability of tools to
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support money management for the economically vulnerable consumers in
this country.
(34) Are there useful international examples of the spread of
mobile technology for financial services that enhance access for low-
income consumers? What differences would or should apply if these
approaches were adapted for the U.S. context?
(35) Does mobile technology offer enhanced possibilities for direct
person-to-person international money transmittal? Does this bring with
it greater risk of theft, fraud or money laundering?
Authority: 12 U.S.C. 5511(c).
Christopher D'Angelo,
Chief of Staff, Bureau of Consumer Financial Protection.
[FR Doc. 2014-13552 Filed 6-11-14; 8:45 am]
BILLING CODE 4810-AM-P