Digital identity verification methods (eKYC) set to ignite Asian digital banking transformation
In the rapidly evolving digital landscape of Southeast Asia, the adoption of digital identity and digital onboarding is gathering pace. Governments across the region are promoting the use of digital financial services, with favourable regulations on digital onboarding, digital banking, and more.
Last week, a virtual panel discussion was held to discuss the state of digital identity and digital onboarding in Southeast Asia. One of the key points of discussion was the approval of a new cross-bank identity verification method by Thailand's central bank in February 2020. This innovative approach allows banks to leverage the National Digital Identity platform for opening bank accounts, providing customers with the convenience of using the verification and information held at their existing bank to verify their identities when opening accounts at new banks.
However, not all banks in Thailand have embraced this change. While several major banks, including Bangkok Bank, Kasikornbank, and Siam Commercial Bank, have joined the shared customer identity verification channel, smaller regional banks and some cooperative banks remain skeptical or have yet to participate. One concern is the potential sharing of customer data with competitors, a hurdle not all banks are willing to overcome. Larger banks in Thailand may also be hesitant to provide services to others and let smaller banks leverage their customer base.
The Philippines is also making strides in digital banking. The central bank recently approved new regulations on digital banking and introduced a four-year strategy on digital payments. Digital banks in the Philippines, such as those operated by UnionBank, will have no reliance on physical touchpoints and will only need one physical office for customer complaints or issues.
Malaysia is another country leading the way in digital identity and digital onboarding. Hong Leong Bank and Hong Leong Islamic Bank have implemented fully digital onboarding processes. However, Shailesh Grover, chief digital and innovation officer at Hong Leong Bank, Malaysia, expressed concern that current eKYC mechanisms do not address the challenges faced by unbanked populations.
The rapid adoption of eKYC across the region is reflective of changing customer behaviours, and with COVID-19, the shift to digital channels has accelerated. Frederic Ho, vice president for APAC of Jumio, emphasised this point, stating that the pandemic has reinforced the need for companies to have a digital arm to ensure business continuity.
However, not all financial institutions in the region are ready to embrace eKYC and digital identity. Conservatism and cost considerations continue to be barriers for some. Digital identity has been identified as a central component to establish trust in non-face-to-face online relationships, making it crucial for the continued growth and success of digital financial services in Southeast Asia.
The webinar discussing digital identity and digital onboarding in Southeast Asia is now available on YouTube for those who missed the live event. The discussion provides valuable insights into the current state and future of digital identity and digital onboarding in the region.
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