eKYC Challenges and How to Overcome Them
eKYC (electronic Know-your-customer) is now a top buzzword among the banking industry. This trend has been going upward, especially since May 2020 when the State Bank of Vietnam officially allowed banks to digitally onboard customers for account opening and cashless payments.
In this article, let’s analyze all the challenges Vietnam’s banks face when adopting eKYC solution.
1. Lack of understanding about eKYC solution and the process of opening a digital banking account
This is a prevalent problem. The methods of opening digital accounts from overseas banks that have been adopted are referred to as an eKYC solution. However, it is difficult for technology or product managers at such institutions to understand how to incorporate those technologies into their existing banking systems with the least amount of risk and the best level of security.
Furthermore, eKYC is used not just for the onboarding process, but also for the registration of subsequent product and service packages with the bank. So, how can we make the financial system's processes and structures run smoothly and automatically? When banks have a staff that is educated in both business and technology, they can address the problem.
2. Internal employees are unfamiliar with new technologies and platforms
If the company does not have a tech-savvy workforce to handle the eKYC application, it will be put under extra strain. It results in a waste of resources in the creation of the solution, as well as significant losses. Bad customer service, in particular, tarnishes the brand's image.
3. There are only a few case studies of eKYC for banks in Vietnam
Because the demand for banks to create digital payment accounts for consumers was just recently increased in May 2020, only a few Vietnamese banks have implemented eKYC in their institutions. As a result, if banks take advantage of the market pioneer, they will face not only an opportunity but also a difficulty. Due to a lack of knowledge, it is difficult to predict operational risks in the Vietnam market.
4. Finding and selecting reliable partners to install an eKYC system is difficult.
In Vietnam, banks select partners based on the following criteria:
- For international partners, it might be a firm that specializes in eKYC solution integration and consulting, or the sole unit that offers technical solutions such as OCR, Face Matching, Liveness Detection, Fraud Detection, and so on. However, it should be highlighted that the law is in line with the State Bank of Vietnam's norms and expertise in the local market for this group.
- Selecting domestic partners that are knowledgeable about banking operations and can advise on infrastructure restructuring as well as a safe and reliable data storage strategy is recommended. Many partners now advocate the eKYC solution, but they should be chosen based on an in-depth discussion of the solution and how they manage the problem.
5. Internal process reengineering to suit new technology operations
Banks will have to restructure and upgrade their workforce when transitioning from a manual to a completely automated procedure. This conversion process has the potential to drastically alter an organization's culture, necessitating the company's ability to adapt quickly and thoroughly. Let's get ready for these shifts.
6. Conversion and storage systems for building infrastructure are relatively costly.
The banking business, in particular, is always concerned about the confidentiality of clients' information, as well as system security to keep hackers and financial crooks out. If banks wish to convert numbers, they must invest in a database of client information and data with a big number of users. The cost of infrastructure investments, on the other hand, is relatively high.
7. It is impossible to predict the official time to apply eKYC
It is undeniable that a digital bank account is required. However, the State Bank of Vietnam lacks precise requirements on digital identity verification via EKYC, particularly the regulation on E-signatures, leaving banks in a position where "every tub must stand on its own bottom" when it comes to building an eKYC solution. The danger is that banks have begun programming in the eKYC process that will have to be "restarted" in order to comply with State Bank requirements.
Understanding the issues that banks will experience when implementing eKYC will enable managers to properly research and plan for the implementation of digital transformation solutions.
KMS Solutions is an excellent choice if you're seeking for a credible and trustworthy partner to accompany your eKYC solutions for the following reasons:
- KMS Solutions has consulted on eKYC solutions as well as solutions for reorganizing a bank's infrastructure in preparation for digital transformation plans.
- The EKYC solution has been built and incorporated into a core banking system that is very stable and secure.
- There is an EKYC onboarding demo available.
- Programming team with banking and financial skills, with a track record of fulfilling project deadlines.
- The project management process has been stabilized and streamlined, with KMS Solutions and partners collaborating seamlessly.