Zoloz e-KYC Platform Empowers Financial Institutions Rolling out Mobile Banking Effectively At Lower Costs

Date : 22-May-2020
Location: Kuala Lumpur

Organization: ZOLOZ

Key Takeaways:
  • In recent years, digitalization of financial services, along with greater internet connectivity and rising smartphone penetration has contributed to making finance more accessible and inclusive, especially for populations in emerging markets. The COVID-19 outbreak has expedited these catalysts while highlighting the need for financial institutions to deliver an improved mobile and digital experience to consumers.
  • In response, we are seeing an increasing number of financial institutions adopt electronic Know-Your-Customer (e-KYC) technology - an online process of verifying the identity of customers and assessing the risks or possible illicit intentions during each transaction - to help them meet complex compliance requirements especially for anti-money laundering (AML) and counter-terrorist financing (CTF). With e-KYC, consumers are no longer required to go to the bank branch to open an account, thus making the on-boarding process faster and more cost-effective.
  • Build e-KYC platforms with three core advantages: 1) financial-grade facial recognition, 2) proprietary ID identification and anti-counterfeiting, and 3) multi risk signal-based security control systems using a real-time ID network.

  • Dr. Jidong Chen, General Manager of ZOLOZ,said, the benefits of adopting e-KYC in developed countries are already clear from a commercial and regulatory standpoint. Given what we are now seeing in emerging markets, the positive impact, especially in the critical issue of promoting financial inclusion, is set to be much more far-reaching and momentous.
Dr. Jidong Chen, General Manager, ZOLOZ
Dr. Jidong Chen, General Manager, ZOLOZ
  • Know Your Customer” itself is a standard banking process by which banks are required to verify the identity of customers before providing services. With e-KYC, the technology is already showing a significant reduction in the burden of authenticating customer identities.
  • The World Bank estimates over 1.7 billion individuals are currently financially excluded, with nearly one in five attributing the situation to a lack of necessary identification documents. For these countries, there are clear benefits of e-KYC, where illiteracy rates are high and people living in remote areas have difficulties accessing financial services.
  • With the simplicity of e-KYC, customers do not need sophisticated technology skills, nor are they required to visit physical branches to fill out forms, thereby benefiting illiterate individuals. While e-KYC helps facilitate the acceleration of digital financial inclusion in many markets, it can also be applied to solve other challenges faced by financial institutions globally.
  • For example, the technology can protect banks by detecting identity fraud and monitoring transactions and portfolios, especially as increasingly sophisticated criminals leverage technology to steal from companies and customers. According to KPMG's Global Banking Fraud Survey, 61 per cent of banks have reported an increase in external fraud by both value and volume over the past three years.
  • It can also help reduce the number of in-person checks and manual exchanges. This minimizes the potential errors and enhances the allocation of resources to other customer experience enhancing activities.
  • Such a focus on efficiency is important as financial institutions around the world face a higher need for resources and growing costs to satisfy regulatory requirements, such as combating money laundering and terrorist financing activities. For them, the impact of non-compliance can be significant.
  • According to industry research, some US$26 billion (MYR112.76 billion) in fines were imposed on financial institutions in the decade since 2008. Furthermore, a study by Refinitiv showed that about a third of financial institutions admitted their biggest challenge is the lack of resources is in conducting KYC and customer due diligence processes.
Best Practices:
  • Incorporate e-KYC into banking processes to reduce bottleneck ranging from two hours of manual review into three minutes of automation.
Case Studies:
  • In India for example, the use of the Aadhaar digital ID for e-KYC was estimated to cut onboarding costs for financial institutions from about US$5 (MYR21.70) to just US$0.70 (MYR3.05) per customer, according to a report by the consultancy McKinsey. 
  • Bangladesh is a prime example of an emerging market that has seen growing benefits from adopting e-KYC. Although some 70 percent of its population lives in rural areas, about half of the country’s adults own a bank or mobile money account thanks to the growing adoption of mobile banking, according to the World Bank’s Global Financial Inclusion Index.
  • In July last year, Bangladesh’s largest mobile financial service provider bKash, a local e-wallet partner of Alipay, introduced an e-KYC function to its mobile banking app, allowing customers to open a bKash bank account by themselves – simply by scanning their national identity card and taking a photo.
Editor's Comments:
  • e-KYC premises on OCR, image recognition and facial recognition technologies.
  • Besides, Blockchain technology can be used as alternative to perform e-KYC, for example, using smart contract to verify the authenticity of the receiving party.