Bank Negara Malaysia issued its policy document on Electronic Know-Your-Customer (e-KYC) on Tuesday, which follows their earlier exposure draft in December 2019. This new policy is in effect immediately for all financial institutions including banks, insurers, remmitance companies, money changers and more.
The policy document aims to accelerate and streamline practices of industry players in their adoption of e-KYC technology, the online process of identifying and verifying individual customers.
We’ve previously written extensively about how e-KYC is a crucial piece of digital banking puzzle and is an important preamble to the virtual banking framework which is anticipated to be released in 2020.
e-KYC enables the digital on-boarding of customers to occur anytime and anywhere. With the implementation of e-KYC, a majority of customers no longer need to visit the physical premises of a financial service provider to open an account. In addition to increased customer convenience, the digital on-boarding of customers enabled by e-KYC also lowers cost for both users and providers. This can also help increase competition in the financial sector over the long term.
The policy documents state that financial institutions may rely on humans to conduct eKYC via video calls or utilise technology like AI, machine learning and predictive algorithms to manage the process.
In their media statement, the central bank said that the introduction of this is in line with their effort to facilitate greater digital offerings of financial services. This is expected to pave the way for greater innovation in the financial sector, including end-to-end offering of digital financial services for customers.
The full document can be found here.
