I’ve moderated and sat in a fair number of fintech panel discussions over the years, a question that is brought up 9 out 10 of every panel discussion is “What do you think are the key technology shaping fintech and banking in Malaysia?” and some variation of that same question.

If you’re like me and have attended too many fintech conferences, the answers will come as no surprise to you. The common answers are often; blockchain, artificial intelligence, open banking, virtual banking, and mobile payment.

Yet despite the importance of eKYC and digital identity, very rarely do you hear any panelists in these conferences pointing out the impact of eKYC and digital identity in Malaysia’s banking and fintech ecosystem.

A study conducted by Mckinsey 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.

A separate study by Refinitiv 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.

It is a fact that has not gone unnoticed by Bank Negara Malaysia, in 2017 the regulator issued the eKYC framework for remittance companies and subsequently in 2019, a similar draft was issued for money changers.

Though there’s development particularly within the Money Services Business (MSB) space, the regulator has not made any formal announcement for eKYC guidelines for the wider financial services sector.

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

Suhaimi: Now there are several banks trialling eKYC with one particular provider

— Vincent Fong (@Vincent_FongKw) June 18, 2019

Suhaimi did not disclose further the nature of the trial nor the details of the provider but credit reporting agency CTOS who is also present at the event shared in a separate session that they are trialing their eKYC project with several banks and they are looking to enter Bank Negara Malaysia sandbox.

Neither party has stated they are referring to the same thing, though there’s a good chance that the snapshot below could be what it looks like.

a sneak peak on how it looks like pic.twitter.com/PgdkoeISWW

— Vincent Fong (@Vincent_FongKw) June 18, 2019

With Malaysia’s population becoming increasingly digital and eKYC technology becoming more affordable, it would be very ideal for Bank Negara Malaysia to release eKYC guidelines for the wider financial services sector.

When you consider those factors alongside the fact Malaysia will be dishing out virtual banking license soon, it’s clear that eKYC regulation for the wider industry is inevitable.

But Malaysia doesn’t have to reinvent the wheel, there are already plenty of countries who have launched digital IDs and eKYC, we just need to learn from them.

Image Credit: Mckinsey

Meanwhile, Muhammad Ghadaffi Mohd Tairobi, the Vertical Director for Banking, Financial Services & Insurance of TM ONE acknowledges that there are many benefits of Digital ID from a business perspective, as it will save time and money by reducing it to over the counter transactions, increasing productivity and enabling seamless and digital driven experiences for customers.

He believes that eKYC then becomes an important process for the banks to perform customer on-boarding faster compared to traditional way of over the counter.

However, Ghadaffi’s key concern was on managing digital ID fraud. He said,

“This is why TM ONE 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”.