Tuesday, November 10, 2020

The development of e-KYC production use cases in Southeast Asia

You may have come across the term e-KYC in the news lately. By removing paper-based procedures, e-KYC (electronic know your customer) can help enhance the entire identity authentication process, which reduces costs and time spent on customer identity authentication while complying to the due diligence. 

Unbanked customers can open new accounts, make a payment, apply for loans digitally or even invest in a financial instrument with just a few clicks on their smartphones and online self-service verification. This enhances the customer experience journey for a digitally savvy consumer based. 

Verifying customers by using paper-based identification and photo ID cards has its drawbacks. Identity verification by human eyeballing is time-consuming as it requires humans to manually read through the documents and verify pictures against identification documents, just imagine how many applications that need verification in a day!

In contrast, eKYC solutions that authenticate customers by using advanced technology such as Artificial Intelligence and machine learning simplifies the identity verification process. The identity verification process only takes a minute or so, making the entire process real-time to customer outreach. 

Southeast Asia surges towards e-KYC

As financial institutions aim to grow their customer bases while preventing fraud, many companies in the Southeast Asian region have also made announcements related to biometrics programmes, deals, as well as awards for technology supporting financial services.

Countries with large populations like Indonesia and the Philippines, are huge archipelagic countries. The strategic location makes financial services conventionally only in urbanized areas. Integrating eKYC solutions makes it more cost effective to drive a financial inclusion agenda, with the simplifying business process and avoiding security risks.

Since the global pandemic COVID-19 outbreak, many businesses realize the fact that physical outreach may not be a suitable permanent solution for customer acquisition, as the pandemic has brought fear to contact-based biometrics systems, such as fingerprint scanners. 

BFSI industry moves towards digital experiences

When talking about digital customer onboarding progress in Malaysia, you may have come across this international remittance, Valyou that offers a fully digital onboarding experience. Valyou is licensed by the Central Bank of Malaysia under the Money Services Business (MSB). With the eKYC solution implemented in their apps, it enables foreign worker communities to create their account without having to go through face to face counter service.

In traditional ways, those who work in remotely located estates or plantations would have to go through about an hour or so to travel to the nearest town.  Not only will it increase customer’s acquisition and retention, but it also drives a seamless customer journey. Ultimately, a more cost-effective remittance fee made possible by advanced technology. 

The booming of digital banks in Southeast Asia has created a new trend with massive breakthroughs in the field. In response, traditional banks in the region are expected to use advanced technology, in this case, biometric eKYC to identify and authenticate their customers to boost efficiency in business processes and eventually, to survive in the fierce competition and changing market. This is to fuel the growth of the digital economy in those countries. A rising number of Southeast Asian countries have either adopted e-KYC or come up with policies to encourage its use.

Telecommunications jumps on board

True to its name, the telecommunications industry also implemented eKYC solutions to enhance their customer journey. Few giant telco companies like Yoodo, powered by Celcom have gone to a fully digital operating business. Sim card registration is made easy with their customer self service app that uses eKYC, which operates 24/7 while complying to registration rules regulated by Malaysian Communications and Multimedia Commission. 

The implementation of e-KYC technologies in a fast-moving environment not only makes things easier for customers but also enhances the productivity and competitiveness of enterprises. A mobile-first strategy means that consumers can conveniently do what they need to do on their own time and terms as people gradually turn to their smartphones to get things done.

The drive of digital payment gateway such as e-wallet

Payment patterns in 2020 appear to push the market in a far more consumer-centered direction, which focuses on how payment can be made as simple and convenient as possible. The true power of digital payments via e-wallets can be unleashed by enabling a society that is highly connected.

In the recent lockdown series in Malaysia, the Malaysian government initiated an economic recovery stimulus plan, which gives a certain amount of money that can be used through the selected e-wallet partners. EMAS eKYC ID verification technology was a part of this ecosystem that enabled e-wallet to verify customers' identities in real-time to help distribute the stimulus package. 

Connectivity and sandboxes in Asia

High mobile penetration in the region encourages the adoption of services such as e-commerce and ride-hailing among consumers. This, in turn, brings about an opportunity to provide embedded financial services. Regulatory policies around the region are also becoming more transparent, with governments promoting digital financial services growth. In reality, the most significant swing factor in the growth of digital financial services across the region would be supportive and clear legislation and government policies.

Consider the regulatory sandbox of Singapore and Thailand, which enables businesses to evaluate technologies under the oversight of regulators in a regulated environment. To improve the efficiency of financial services, Singapore and Thailand have developed standardized QR codes for mobile payments. Indonesia has put in place a National Inclusive Finance Policy aimed at improving the economy by broadening the demand for banking services. Similar objectives were declared by Vietnam.

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