The banking sector is waiting for the State Bank of Vietnam to allow the use of electronic know your customer/client (e-KYC) (Photo: TPBank) Hanoi (VNS/VNA) - The banking sector is waiting for the State Bankof Vietnam to allow the use of electronic know your customer/client (e-KYC).
TPBank was chosen to trial it in January last year.
According to LegalDesk Website, KYC or Know Your Customer is aprocess an institution employs for customer identification. The SecuritiesExchange Control board of India (SEBI) laid down that any institute that dealswith financial transactions or functions as financial intermediaries needs toverify their customer’s identity under the Prevention of Money Laundering Act,2002.
With banks and mutual funds instituting the KYC process for all its customers,it did help with preventing money fraud and identifying suspicious transactionactivity of an account holder. KYC is a one-time process that is mandatory forall people of Indian nationality.
eKYC is the process of an institution getting acquainted with their customer,though electronically. The main objective of electronic KYC is to reduce theuse of physical paperwork, storage space for such records and the cost and timetaken for the same. eKYC permits filing to happen in real-time. This has madethe process streamlined and less prone to corruption in industries such asbanking, finance, telecom, etc. whereby several customers can be catered tosimultaneously with the use of the worldwide web, the web says.
In reality, financial service providers that want to develop digital servicesare facing an obstacle: they are obliged to physically verify the identity ofcustomers to comply with regulatory requirements.
But they need to deliver a customer-friendly experience to keep existingcustomers and get new ones.
If online verification is made possible, people, especially those who areunbanked, can open new accounts, apply for loans online, take out lifeinsurance policies, and invest in mutual funds, in an era when consumers preferto interact through online channels.
Because of its advantages, e-KYC is expected to create a digital banking boomin Vietnam, experts say.
Many banks have askedthe central bank repeatedly to allow them to adopt e-KYC, but it has yet to doso.
A senior bank executive in HCM City, who asked to be unnamed, said to growdigital banking banks should make it easy for prospective customers to openaccounts online.
Now, people have to bring all personal papers to the bank to confirm theiridentity when they want to open an account.
“This causes difficulties for banks to expand their customer network or providefinancial services since people do not want to waste their time overcomplicated procedures to open a bank account or get other banking services,”the executive said.
Ngo Van Duc, deputy head of the payment systems oversight division at the SBV’spayment department, said 63 percent of Vietnamese adults had bank accounts, butthe ability to access banking services is still limited, especially in ruralareas.
Banking services have been undergoing a rapid process of digital transformationand digitisation, which has fundamentally changed the business models used bybanks.
The first foremost aspect is that digital banking lowers transaction costs forbanks.
For financial institutions, digital banking can help reduce transaction costsby 30-80 percent.
There are estimates that when banks adopt a new advanced technology, despiteits costs profits increase disproportionately not to speak of the spike incompetitiveness.
It also enables banks tointegrate a wide variety of services like healthcare, insurance and tourism.
A 2017 survey by IDGVietnam found that 81 percent of Vietnamese customers wanted to use e-bankingservices.
According to figures released last year by the central bank’s paymentdepartment, 94 percent of domestic banks have plans to go digital, with 35 percentdeveloping their own strategies for digital services. Several banks havelaunched new banking services after going digital.
Many analysts are convinced the central bank will soon allow e-KYC.
One question that crops up is why has it not done so yet? And the answer may bean insufficient legal framework and high risks.
Analysts admitted legal regulations for electronic verification of customers’identities are not adequate since citizens’ data has yet to be standardised andmade consistent.
These limitations mean people could easily fake data or carry out cyber-attacks.
Some customers said they would not be among the early users of digitalauthentication technology for financial services since they were afraid ofpossible security and personal privacy breaches.
But analysts said e-KYC is imperative considering the digital renovation takingplace worldwide including in Vietnam.
They even said the Government should allow banks to access the Ministry ofPublic Security’s national population database to ensure they could safelyadopt e-KYC./.
TPBank was chosen to trial it in January last year.
According to LegalDesk Website, KYC or Know Your Customer is aprocess an institution employs for customer identification. The SecuritiesExchange Control board of India (SEBI) laid down that any institute that dealswith financial transactions or functions as financial intermediaries needs toverify their customer’s identity under the Prevention of Money Laundering Act,2002.
With banks and mutual funds instituting the KYC process for all its customers,it did help with preventing money fraud and identifying suspicious transactionactivity of an account holder. KYC is a one-time process that is mandatory forall people of Indian nationality.
eKYC is the process of an institution getting acquainted with their customer,though electronically. The main objective of electronic KYC is to reduce theuse of physical paperwork, storage space for such records and the cost and timetaken for the same. eKYC permits filing to happen in real-time. This has madethe process streamlined and less prone to corruption in industries such asbanking, finance, telecom, etc. whereby several customers can be catered tosimultaneously with the use of the worldwide web, the web says.
In reality, financial service providers that want to develop digital servicesare facing an obstacle: they are obliged to physically verify the identity ofcustomers to comply with regulatory requirements.
But they need to deliver a customer-friendly experience to keep existingcustomers and get new ones.
If online verification is made possible, people, especially those who areunbanked, can open new accounts, apply for loans online, take out lifeinsurance policies, and invest in mutual funds, in an era when consumers preferto interact through online channels.
Because of its advantages, e-KYC is expected to create a digital banking boomin Vietnam, experts say.
Many banks have askedthe central bank repeatedly to allow them to adopt e-KYC, but it has yet to doso.
A senior bank executive in HCM City, who asked to be unnamed, said to growdigital banking banks should make it easy for prospective customers to openaccounts online.
Now, people have to bring all personal papers to the bank to confirm theiridentity when they want to open an account.
“This causes difficulties for banks to expand their customer network or providefinancial services since people do not want to waste their time overcomplicated procedures to open a bank account or get other banking services,”the executive said.
Ngo Van Duc, deputy head of the payment systems oversight division at the SBV’spayment department, said 63 percent of Vietnamese adults had bank accounts, butthe ability to access banking services is still limited, especially in ruralareas.
Banking services have been undergoing a rapid process of digital transformationand digitisation, which has fundamentally changed the business models used bybanks.
The first foremost aspect is that digital banking lowers transaction costs forbanks.
For financial institutions, digital banking can help reduce transaction costsby 30-80 percent.
There are estimates that when banks adopt a new advanced technology, despiteits costs profits increase disproportionately not to speak of the spike incompetitiveness.
It also enables banks tointegrate a wide variety of services like healthcare, insurance and tourism.
A 2017 survey by IDGVietnam found that 81 percent of Vietnamese customers wanted to use e-bankingservices.
According to figures released last year by the central bank’s paymentdepartment, 94 percent of domestic banks have plans to go digital, with 35 percentdeveloping their own strategies for digital services. Several banks havelaunched new banking services after going digital.
Many analysts are convinced the central bank will soon allow e-KYC.
One question that crops up is why has it not done so yet? And the answer may bean insufficient legal framework and high risks.
Analysts admitted legal regulations for electronic verification of customers’identities are not adequate since citizens’ data has yet to be standardised andmade consistent.
These limitations mean people could easily fake data or carry out cyber-attacks.
Some customers said they would not be among the early users of digitalauthentication technology for financial services since they were afraid ofpossible security and personal privacy breaches.
But analysts said e-KYC is imperative considering the digital renovation takingplace worldwide including in Vietnam.
They even said the Government should allow banks to access the Ministry ofPublic Security’s national population database to ensure they could safelyadopt e-KYC./.
VNA
