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According to a study by McKinsey’s recent report, allowing eKYC could save businesses up to 90% on customer onboarding costs. Based on the same report, digital identity could enable 1.7 billion people who are currently unbanked to access financial services. Government agencies, especially the regulator, are being urged to release eKYC guidelines for the wider financial services sector as Malaysia's population becomes more digital and eKYC technology becomes more accessible.
Given these factors, as well as the fact that Malaysia will be issuing digital banking licenses soon, eKYC regulation for the entire industry is unavoidable and necessary. It is important to remember that Malaysia would not have to look far for resources; many countries have already implemented digital IDs and eKYC. It will be more cost-effective and time-efficient to learn from them. Meanwhile, a leading Malaysian telecommunications company's Vertical Director for Banking, Financial Services, and Insurance acknowledged that Digital ID has numerous business benefits. For example, by reducing interactions to over-the-counter transactions, increasing efficiency, and allowing smooth and digitally-driven experiences for consumers, the technology can save time and money. Essentially, the digital automation of customer onboarding is a step into the future most, if not all companies have to take.
Experts agree that eKYC would become a critical process for banks to perform faster customer onboarding than the conventional over-the-counter method.
However, handling digital ID fraud is a major concern. As a result, regulator and authority's guidance on eKYC implementation guidelines with information security requirements are making it easier for the BFSI industry to execute this initiative successfully. Now that eKYC has made its way towards the BFSI industry, the trend also rises among non-financial digital companies.
Property Technology (PropTech)
The rise of Property Technology, often referred to as PropTech across the globe represents the combined result of the real-estate, Internet-of-Things (IoT), finance and technological industries. Innov8tif started serving the PropTech industry for the first time since 2020. Prior to this, Innov8tif’s services and solutions were not needed by the industry as process digitalisation solutions were not mandatory for their continued operation. But now, PropTech players needed a method to sign property contracts virtually.
PropTech players are attempting to remain sustainable while also preparing for what lies ahead in the post-Covid-19 setting. Some behaviours and programs, such as self-service registration fortunately will continue, as people would choose not to meet in person if anything can be done online.
Use cases related to the online signing of business-to-business (B2B) or business-to-consumer (B2C) agreements are examples of emerging areas where eKYC can see a lot of adoption. A tenancy agreement led by a property technology (proptech) firm, a service subscription agreement signed by a customer and a service provider, or a business transaction agreement (ie a lending facility) signed by two business entities could all be examples.
Insurance Technology, or InsurTech refers to the use of technology innovation with the purpose to reduce costs and create efficiency from the current traditional insurance industry practices. Now, InsurTech is an ecosystem that brings together adjacent industries to provide an improved service of greater value to insurers and their customers.
Boost, Malaysia’s e-wallet payment platform provider last year initiated Boost Protect microinsurance plan, to make it easier for a person to subscribe to lifestyle insurance. The microinsurance plan provides affordable, accessible, and on-demand protection that focuses on catering to the daily necessities of businesses and households for Malaysians. The insurance product is underwritten by Great Eastern Life.
The KYC system uses advanced biometrics technology such as face recognition and optical character recognition, and it only requires a smartphone and an ID to complete the authentication process, making it simple for users. By simply looking at their phone, users can turn on their mobile devices, log in to an application, and verify an online payment transaction.
By removing paper-based procedures, eKYC will enhance the entire authentication process, lowering the cost and time spent on verification. Unbanked customers can use their smartphones to open new accounts, make deposits, apply for loans, and invest in financial products with online verification.
Consumers want the convenience of signing up through digital channels, and banks want to increase new account enrolment through quicker, cheaper, and less expensive digital channels, so many have switched to digital KYC.