eKYC (electronic Know Your Customer) solution opens up a potential market. According to FnF Research, the global eKYC market is estimated to reach US$257.23 million in 2019 and is expected to reach US$1,015.36 million by 2026, and is expected to grow at a compound annual growth rate (CAGR) of up to 22% through 2027.
Summary of eKYC
The Covid-19 pandemic has created a major turning point in the global banking and finance industry as customer demand has shifted remarkably from offline to online. Therefore, in the near future, a market share competition for digital solutions among industry incumbents will occure and Vietnam is no exception. During two–years of the pandemic (2020 – 2021), quarantine and social distancing measures have caused a series of banking transaction centers to close, which means limiting access to new customers and the ability to take care of existing customers. This creates a major challenge for banks in terms of its mission to achieve maintenance and growth goals. However, the reality shows that some banks reap the sweet fruit while still attracting a large number of customers thanks to the digital solution “eKYC”. So what is eKYC? Why does the eKYC app help banks attract a large number of customers, even during periods of social distancing?
eKYC (electronic Know Your Customer) is an electronic customer identification which allows automatic online customer identification without face-to-face interaction through the applied technology including instantly checking and collating personal information with a centralized database of user identity, biometrics authentication, customer identification by artificial intelligence (AI),… In the banking industry the identification of customers is carried out during the process of customers opening accounts.
There are certain differences between the use of traditional and electronic identifiers in terms of customer journal. To open an account in the traditional way, the customer needs to go to a representative office of the financial institution, wait in line for their turn and then fill out and present papers. Staff will eventually identify the customer manually. The entire process can probably take a few hours.
Unlike the aforementioned traditional customer identification, customers can open their own online accounts using eKYC technology within just a few minutes after these simple steps: download mobile app/ visit the website, fill out information, take photos of identity documents (ID card or passport, etc.), perform some facial recognition operations. The seamless customer experience has been a key reason that customers look to banks with eKYC services to open accounts during the pandemic while non-contact is a top priority.
Benefits offered by eKYC application
eKYC, in addition to attracting customers, also brings a lot of value in different aspects to financial institutions, such as:
1. Quicker and more efficient: as explained above, just a few minutes of opening an account without waiting and being able to open an account 24/7 with just the need for Internet.
2. Cost savings: Comparing the two traditional forms, the costs regarding time, paperwork, human resources can be saved
3. Limiting the risk of fraud: Limiting the risks that people are difficult to detect such as falsifying ID cards, fraud, money laundering,…
4. Increase customer experience: Surely eKYC will be an experience that the majority of customers are satisfied with because they do not spend time, effort commuting while receiving results quickly. On the other hand, it also reduces the risk of losing documents while having to carry it in the form of opening a traditional account.
eKYC application in Vietnam
Since July 2020, several banks have pioneered the use of this technology such as TP Bank, VP Bank, HD Bank, Viet Capital Bank, NCBank, LienVietPostBank, etc. In 2021, many other banks continue to deploy online account opening services using eKYC such as BIDV, VietcomBank,… An example to prove that eKYC is a sweet fruit that helps the Bank increase the number of customers through the creation of online accounts during the epidemic season: Since the revised Circular No. 16/2020/TT-NHNN took effect from March 5, 2021 after more than a month of implementation by April 2021, the whole system has had 15 banks officially deployed with 340,000 opened accounts using eKYC technology according to the report from the Payment Department of the State Bank of Vietnam. In which, some prominent figures such as TPBank attracted 30,000 customers to open online accounts, equivalent to 85% of the customers registered to open at the counter or at LiveBank in the traditional way; HD Bank has more than 15,000 accounts that have performed electronic authentication after 1 month of implementation,…
Lagging banks and financial institutions are recommended to quickly take action to regain market share as well as reducing costs and improving business efficiency when the epidemic is still going on. Currently in the market, there are many eKYC solutions available and these systems can be easily integrated so that banks and financial services can easily deploy it quickly.