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eKYC key to enhancing Malaysia’s digital banking revolution

The importance of e-KYC remains largely underappreciated in most discussions on e-commerce technology where the focus is usually on more “big-ticket” technologies like blockchain, AI or IoT, an expert stated.

Despite its importance, very rarely do tech experts pointed out the impact of eKYC and digital identity in Malaysia’s banking and fintech ecosystem.

A recent study shows that there is a potential cost reduction of 90% in customer onboarding cost by enabling eKYC. The same study also indicated that digital identity could potentially enable 1.7 billion of the unbanked population to gain access to financial services.

Another separate study further breaks down the cost KYC, much of the cost is largely attributed to staffing costs, which supports that idea that digitising the KYC process could significantly reduce the cost of customer onboarding.

There have been some chunks of information, however, during the MyFintech Week earlier this year, BNM’s financial development and innovation department director mentioned that there are currently 11 banks trialling eKYC solutions.

As Malaysia’s population grows increasingly digital and eKYC technology becomes more affordable, government agencies, particularly the regulator, is being urged to release eKYC guidelines for the wider financial services sector.

Considering these factors alongside the fact Malaysia will be issuing virtual banking license soon, it is clear that eKYC regulation for the wider industry is inevitable and imperative.

It is important to note that Malaysia will not have to look far to find resources, there are already plenty of countries who have launched digital IDs and eKYC. It would be cost- and time-efficient to need to learn from them.

Meanwhile, the Vertical Director for Banking, Financial Services & Insurance of a leading Malaysian telecommunications company acknowledged that there are many benefits of Digital ID from a business perspective. For example, the tech will save time and money by reducing interactions to over-the-counter transactions, increasing productivity and enabling seamless and digitally-driven experiences for customers.

Experts believe that eKYC then becomes an important process for the banks to perform customer onboarding faster compared to traditional way of over the counter.

However, a key concern is managing digital ID fraud. Hence, the telecom’s eKYC solution is in compliant with Risk Management in Technology (RMiT) and Data Residency and Sovereignty requirements to assist the BFSI industry in the successful implementation of this initiative.

BNM’s eKYC tech

In August 2019, Bank Negara Malaysia issued an exposure draft which expanded its e-KYC guidelines for money changers in Malaysia.

The draft outlines proposed the minimum requirements and standards that a licensed money changer approved to implement e-KYC must observe in on-boarding customers.

The draft largely mirrors the earlier policy document but with some minor tweaks in requirements reflecting the nature of a money-changing business.

While the widening of e-KYC for the purposes of on-boarding customers is a move that is welcome by all, the industry eagerly awaits e-KYC’s applicability across the financial services industry.

It is anticipated that an industry-wide e-KYC guideline would be made available prior to the issuance of the virtual banking framework scheduled for the end of 2019.

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Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

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Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

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SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

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IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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