Barriers to the Adoption of Digital Financial Services: A Case Study of SMS Fraud in Pakistan

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In 2016, we established the Digital Financial Services Research Group at University of

Washington to investigate the technological challenges in improving access to financial

services for the world’s poor and to promote a global research community at the intersection

of Computing for Development and Financial Services. The research approach was to focus on

specific barriers identified by the financial services community and to develop and pilot

solutions. In this talk, I will present one specific project: An assessment of SMS fraud in

Pakistan. There is the concern that widespread scams initiated by SMS have a negative impact

on the low income population that are the target of financial inclusion initiatives. To investigate

this we collected fraudulent SMS messages in Pakistan through various means and conducted

a range of consumer and stakeholder interviews. Based on our analysis, SMS fraud is

dominated by lottery type schemes, which have the greatest impact on vulnerable, low-income

rural populations. To detect SMS fraud, we offer a simple heuristic for fraud detection that has

a high accuracy rate and is adaptable to evolving fraud schemes. We develop a

recommendation of a fraud mitigation strategy based on targeting fraudster call back

numbers.