The systems that protect financial consumers and lift them out of poverty are under unprecedented pressure. In the wake of the shutdown of the Consumer Financial Protection Bureau (CFPB) in America, and USAID, which funds consumer protection globally — there is growing concern about the future of trust in our financial systems. Without alternatives clearly communicated by political leaders, what systems will serve and protect the most vulnerable financial consumers?
This challenge comes as fraudulent schemes proliferate at a speed and sophistication never seen before, with the international cybercrime industry building entire hubs off financial scams. The Global Anti-Scam Alliance estimates that these schemes cost our world $1 trillion in 2023. That’s equivalent to the GDP of Saudi Arabia or roughly half of global military spending.
So supervisors are no doubt aware of Elon Musk’s “Delete CFPB” and “CFPB RIP” posts leading to the shutdown of what was one of the world’s top financial consumer protection bureaus (processing an average of 25,000 complaints per week — over 1 million per year).
Amidst this uncertainty, there is however a unique opportunity for efficient AI-based systems that ensure a regulatory grasp on financial services, and — most importantly — prove resilient during destabilising events.
The global impact of modern financial misconduct
The human impact of these scams are most pronounced in developing countries, where newly-banked populations are an easy target following the last decade’s financial inclusion initiative.
In the West African country of Senegal, 90% of consumers reported a consumer protection problem with their digital financial services, and 32% lost money as a result. This same World Bank study found that scammers exploited technological and education gaps in underserved communities, using social engineering attacks, fraudulent mobile money scams, and pyramid schemes.
Misconduct is not limited to the developing world and criminal organisations. In the United States, the self-regulation model for major banks led to an aggressive cross-selling scheme within Wells Fargo, starting in 2002. The bank’s sales culture prompted the unauthorised opening of at least 2 million bank accounts, costing customers millions in fees and damaging credit scores. The scheme was only discovered in 2013 by Los Angeles Times reporting, leading to regulatory fines in excess of $3 billion.
Needless to say, supervisors are already behind. With the precedent of CFPB’s shutdown and the pulling of USAID funding globally, there is a palpable vacuum in global consumer protection. This vacuum can either be an opportunity for the accelerated exploitation of consumers — and the irreparable undermining of financial trust — or it can be an opportunity to double-down on the technology that actually works.
While the move fast and break things approach transplanted from the tech sector into government via Elon Musk’s Department of Government Efficiency is drawing reactions along partisan lines, innovation nevertheless offers a practical path forward for supervisors that were already overwhelmed.
AI-based consumer protection is the way forward
Generative AI is a game-changer for fraudsters, with malicious uses of voice AI and social media scraping offering new ways to exploit financial consumers. As you might imagine, criminals and unregulated financial operators are not exactly cautious about using this technology. So the gauntlet is down: supervisors can embrace this technology for good, or face its weaponisation.
Proto, a Canadian conversational AI startup, has been at the forefront of these challenges in developing countries. In 2019, it was the first company to deploy an AI assistant for consumer protection at the Central Bank of the Philippines to rapidly collect and track financial complaints across local languages and apps like Facebook Messenger.
As of 2024, this AI assistant processed 1.4 million interactions and increased its automation rate from 76% to 95% – delivering scalability and effectiveness. In a country where 77% of adults are still unbanked and financial inclusion drives more new consumers every day, this tech is playing a vital and cost-effective role in backstopping trust in the financial system.
Thanks to the United States, this project was funded in part by USAID, and then transitioned to Proto’s self-sustaining, for-profit model without relying on donor funding. This shift ensured that financial consumer protection became a permanent fixture, removing dependence on donors. The solution expanded into Africa where it was taken up by the National Bank of Rwanda, and is now being scaled by the Gates Foundation with the same focus on sustainability.
Ending donor and political dependency
Proto had begun thinking through sustainable models for consumer protection years ago. What if the unthinkable were to happen, such as the world’s largest aid agency shutting down? What if supervisors could no longer afford to procure – let alone maintain – the AI-based systems that offer the most credible recourse against scammers?
Through our partnerships with private philanthropy, we’re now scaling the shared service model. This model — already being implemented across 30 government agencies in the Philippines — provides an integrated AI consumer protection system across supervisors with limited budgets. Following the initial sponsorship period, the license for the technology is divided across the agencies, with the per-agency cost falling below limited budget thresholds.
In effect, this model provides unending and equal access for supervisors to a competitive AI consumer protection system, without the need to solicit ongoing donor funding, nor attempts at unwieldy digital transformation projects that can run over-budget and drive massive profits for consultants.
The benefits of this model extend beyond financial viability to also mitigate political instability. By using AI, supervisors can transition from outdated, reactive consumer protection to data-based, proactive processes that are less vulnerable to claims of inefficiency. In a worst case scenario, streamlined AI-based systems on a shared service model can augment supervisors’ ability to maintain a baseline of consumer protection, even in the face of budget cuts and political interventions.
While the shutdown of CFPB and USAID will set back global efforts to protect financial consumers, this shock can serve to encourage supervisors to modernise and insure their consumer protection mandates. Ultimately, keeping consumer trust in the financial system is in the interest of governments of any political stripe – it’s the backbone of tax revenue, economic growth, and national prosperity.
There is a way forward, and for-profit AI firms like Proto, are doing their part to help supervisors combat financial scams with technology that is efficient, inclusive, and resilient to systemic shocks.
