Article

Financial Inclusion: Transparency Could Be Essential

2026-11-06 · By Carlos Vargas-Silva, Professor of Migration Studies, University of Oxford, and Fellow, Kellogg College

Carlos Vargas-Silva explores why transparency may be essential to financial inclusion. Drawing on research with more than 1,500 low-income residents in Medellín, Colombia, the article shows that missing information about fees, restrictions and protections can discourage people from choosing financial products—even when the known alternatives have unfavourable conditions.

Financial inclusion is about more than access to banking services. New research from Colombia reveals how missing information about financial products can discourage people from using them, even when the alternatives have unfavourable conditions. The findings highlight why greater transparency could be essential to making financial services truly inclusive. The full report related to the research will be published in early 2027.

Access Alone Is Not Enough

Globally, expanding access to financial services is a central priority in efforts to reduce poverty and economic inequality. Digital financial services, mobile banking and new payment technologies are creating opportunities for people who have traditionally been excluded from formal financial systems.

But access does not necessarily translate into use. Even when financial products are available, people may hesitate to adopt them, particularly when they face economic uncertainty or have limited experience with financial institutions.

This raises important questions: What makes people willing to use a financial product? How much does the information they receive influence that decision?

The Architectures of Trust in Financial Inclusion Systems project, a collaboration between the University of Oxford and the Interledger Foundation, addresses these questions.

The Hidden Barrier to Financial Inclusion

For people living on low incomes, choosing a financial product can involve difficult trade-offs. Transaction fees, minimum balance requirements, withdrawal restrictions and protection against fraud can all affect whether a service meets their needs.

Yet information about these conditions is not always readily available. Consumers may be asked to make financial decisions without knowing exactly what they are signing up for.

This matters because uncertainty itself may discourage people from engaging with formal financial services. A product with unclear conditions could be less attractive than one with known disadvantages, even when those disadvantages involve additional costs.

Understanding this distinction is critical for financial inclusion strategies. If missing information is itself a barrier, expanding financial access or building confidence in institutions may not be sufficient to encourage adoption.

What Can Colombia Teach Us?

To investigate these questions, our research examines how information transparency and institutional trust shape financial product choices among low-income residents of Medellín, Colombia. Medellín provides a particularly relevant setting, where formal banking and digital financial services coexist with widespread cash use and incomplete financial inclusion.

Over 1,500 participants from across all Medellin boroughs, compared hypothetical financial products with different characteristics, including fees, exchange rates, fraud protection, interest payments and withdrawal conditions. These are the types of products used to receive remittances, make payments or save money. Crucially, some product characteristics were deliberately left undisclosed.

We also tested whether providing information about financial institutions and government regulation could strengthen institutional trust and influence financial decisions. This allowed us to explore whether greater trust could compensate for missing product information.

Uncertainty Comes at a Cost

The findings reveal a striking pattern: people consistently penalise financial products when important information is missing.

Across product characteristics, missing information reduced the likelihood of choosing a product compared with explicitly unfavourable conditions. In other words, participants sometimes preferred knowing that a product had disadvantages over not knowing its conditions at all.

Another important finding concerns trust. Although providing positive information about financial institutions and regulation modestly increased reported institutional trust, it did not significantly change product choices or reduce the negative effect of missing information.

The evidence also suggests that uncertainty, rather than perceptions of dishonesty, may help explain these decisions. Participants who were less comfortable with risk or preferred having more information before making decisions were particularly sensitive to missing product details.

These results challenge the assumption that strengthening institutional trust alone will encourage people to use financial services.

What Does This Mean for Businesses and Policymakers?

For financial service providers, the findings suggest that transparency should be treated as a central component of inclusive product design, rather than simply a regulatory obligation.

Clearly communicating fees, restrictions and consumer protections may be just as important as improving product features. Financial institutions should consider not only what information they disclose, but whether consumers can easily find, understand and compare it.

For policymakers and development organisations, the research raises questions about financial inclusion interventions that prioritise access, financial education or institutional trust without addressing product-level transparency.

There is also an opportunity for collaboration. Financial institutions, regulators and civil society organisations can work together to develop clearer disclosure practices that respond to the needs of financially vulnerable consumers.

Building Inclusion Through Clarity

As financial services become increasingly digital and complex, ensuring that consumers understand the products available to them is an important challenge.

Our research offers a simple but potentially powerful insight: people may be more willing to accept unfavourable financial conditions than uncertainty about those conditions. A product with unclear conditions could be less attractive than one with known disadvantages, even when those disadvantages involve additional costs.

The broader lesson is that financial inclusion requires more than making products available or encouraging people to trust the institutions providing them. It also requires giving consumers the information they need to make informed choices.