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- 1. Digital eKYC, Digital Onboarding, Digitalsignatures In Arab Countries AMF Regional Fintech Working Group Technical workgroup stream deliverable
- 2. A G EN D A • Digital identification • Customer digital onboarding • Digital signatures • Challenges • Arab Country survey insights
- 3. Need for aDigital ID as a form of Legal Identification Source : McKinsey
- 4. Digital ID –Use case spectrum Source – Mckinsey Digital institute Focus Area →>
- 5. Digital ID systems- Across the world Source – Mckinsey Digital institute
- 6. Digital ID –Recipe for a good Digital ID Source – Mckinsey Digital institute • Verification over digital channels • Verified to a high degree of assurance • Unique- And linked with a biometric element • Established with individual consent
- 7. Digital ID systems– Survey Insight – Arab Countries 91% 4% 5% DO THE ARAB COUNTRIES POSSESS FOUNDATIONAL IDENTIFICATION SYSTEMS? Yes No In progress Yes 32% No 32% In process 23% No response 13% WHAT % OF THE ARAB COUNTRIES HAVE THEIR FOUNDATIONAL ID SYSTEM IMPLEMENTED AS A DIGITAL ID SYSTEM?
- 8. Digitization Index - Benchmarks •Digital leaders include Norway, Singapore,South Korea, Sweden, UK • Consumer adoption among some Arab region countries exceeds digital leaders • Some Arab region Governments have embraced digital • ICT supply and innovation in the Arab region countries is lagging behind Source – Digital Mckinsey
- 9. Arab Region/Middle Eastcountries – Consumers are leading the charge in digitization Source – Digital Mckinsey
- 10. Customer Digital On-boarding •Majority of financial institutions undertake cumbersome and strenuously manual processes for customer onboarding onto the banking system. • Involves collection of ID documents, verification against national ID sources, AML and sanction list checks, credit bureau checks etc • Today’s technology allows for onboarding customers digitally and in minutes Digital Onboarding enables a new and seamless customer experience by simplifying the access to financial services while reducing processing time and cost for financial institutions due to optimized processes
- 11. Customer Digital On-boardingand eKYC Customer Digital Onboarding through Electronic channels – Mobile banking Customer Bank Standard Digital Onboarding Download Mobile App Begin Online Registration Online Registration Steps EID Scan Self Pic AML/Compliance Check FATCA/CRS inputs Show fees and charges Online Acceptance of T&C’s Biometric Enrollment Account Opened (with thresholds to operate) If backoffice verification is ok Schedule delivery of ATM Card Bank back office verifies online submissions Release Account for full operation Inform Delivery team EIDA validation and obtain customer signature by Service provider Deliver ATM Card •Mobile First •Verification of identity followed by banking specific customer due diligence measures. •Seamless experience •Customer is provisioned with an account number within minutes (with thresholds until physical verification). •Many banks in the Arab Region have such digital on-boarding mechanisms in place
- 12. Digital On-boarding andeKYC –National ID online verification •Schematic shown with National ID online verification (UAEPass of the UAE) •Simplifies the eKYC rigor for each bank •Every resident is being enrolled •More than 55 government services being UAEPass enabled Customer Digital Onboarding through Electronic channels – Mobile banking Customer Bank Digital Onboarding through UAEPass Download Mobile App Begin Online Registration Online Registration Steps AML/Compliance Check FATCA/CRS inputs Show fees and charges Online Acceptance of T&C’s Biometric Enrollment Account Opened (with full operation capability) If backoffice verification is ok Schedule delivery of ATM Card Bank back office verifies online submissions Inform Delivery team Deliver ATM Card UAEPass Validation for “Verified” ID In the banking industry, 38% of customers stated user experience (UX) as the most important criterion when choosing a digital bank Deloitte, Inside Magazine Issue 16, Part 01 From a Digital perspective
- 13. Digital On-boarding andeKYC– Arab country examples UAE’s UAEPass National digital identity infrastructure In addition for UAEpass being recognized as a legal basis for banks to onboard customers digitally , it also incorporates ability for customers to digitally sign documents and also holds an electronic vault to store relevant documents to avail different banking and government services.
- 14. Digital ID –Authentication – Arab country examples
- 15. Digital On-boarding andeKYC– Arab country examples Central banks of Saudi Arabia (Abshar), Oman, Qatar, Morocco, Tunisia, Libya, Lebanon, Egypt, Jordan, Yemen, Palestine,Sudan and Kuwait also have plans to implement e-KYC Bahrain’s BENEFIT to Create National e-KYC Utility in Bahrain Bahrain's Electronic Network for Financial Transactions (BENEFIT) has implemented national Know Your Customer (KYC) utility that incorporates blockchain technology. Blockchain-integrated utility will support more than 380 financial institutions to improve customer experience and drive KYC efficiencies across Bahrain. With the ability to retrieve and process client KYC and other data from the related bodies including Bahrain’s Information & eGovernment Authority (IGA) and will also include international screening without the need for a physical presence, document verification or authentication.
- 16. Implementation of eKYC- Survey Insight – Arab Countries 2 3 12 4 1 0 2 4 6 8 10 12 14 Yes Number of Countries with a fully operational e-KYC procedure Number of Countries that have e-KYC procedures in the pilot or implementation phase. Number of Countries that have a plan to implement e-KYC procedures Number of Countries that have no plan to implement e-KYC procedures No Response
- 17. Digital On-boarding andeKYC– International examples Coverage – 90% of India’s population OTP and Biometric element mandated in digital eKYC verification and authentication Key element in eKYC and digital customer onboarding and a variety of societal interactions South Korean – Digital only bank, > 10 million customers in 2 years 7 minute eKYC and digital onboarding Full banking services - accounts, loans, cards UK – Digital only bank, 40,000 accounts per week 10 minute eKYC and digital onboarding Full banking services - accounts, loans, cards
- 18. Digital On-boarding andeKYC– International examples UK – Digital only bank, 8Million+ customers 10 minute eKYC and digital onboarding Full banking services - accounts, loans, cards Digital only bank, > 2.3 million customers across 24 European markets 5 minute eKYC and digital onboarding Full banking services - accounts, loans, cards UK’s first digital only bank eKYC and digital onboarding Full banking services - accounts, loans
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- 20. Authentication • Digital signaturesare used to authenticate the source of messages. The ownership of a digital signature key is bound to a specific user, so a valid signature shows that the message was sent by that user. Integrity • In many scenarios, the sender and receiver of a message need assurance that the message has not been altered during transmission. Digital signatures provide this feature by using cryptographic message digest functions. Non-repudiation • Digital signatures ensure that the sender who has signed the information cannot at a later time deny having signed it. Key elements of Digital signature
- 21. Schematic – DigitalSigning Source – revasolutions.com
- 22. Cost Reduction anderror prevention. • Reduce turnaround times by 80%, Significant ROI benefits, reduce document errors • RBC saved 8 Million USD annually by shaving 82,000 staff hours and reduced document errors by 75% Enhanced Security • Technologies using digital certificate signing have matured providing a very high degree of assurance Faster service delivery • Much faster delivery and acceptance of digitally signed documents User Convenience • Customers are able to process signatures from any computer, tablet, or smartphone Digital signatures provide the following key benefits
- 23. • Product offeringsto customers • Account opening • Signature cards • Standing orders • Loan documents • Investments • Mortgage origination and closing • Operational support materials, such as appraisals, disclosures, and employment verification • Vendor contracts Key Banking processes for Digital signature adoption
- 24. Digital Signature –Arab country example - UAEPass UAE’s UAEPass National digital identity infrastructure In addition for UAEpass being recognized as a legal basis for banks to onboard customers digitally , it also incorporates ability for customers to digitally sign documents and also holds an electronic vault to store relevant documents to avail different banking and government services.
- 25. Digital On-boarding andeKYC– Arab country examples DMCC has implemented E-signature DMCC is the first Free Zone in the UAE to offer electronic signatures Enabling DMCC members to execute signature requirements on a range of documents online, from any device in any location in a safe a secure way. DMCC has partnered with DocuSign. Free Zone in the UAE
- 26. Digital Signature –Survey Insight – Arab Countries Yes 77% No 23% Are there any regulations in place or being drafted in relation to Digital signature?
- 27. Digital Signature Usage- Global examples Source – EY Research
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- 29. Vendor Landscape -Digital ID , Onboarding and eKYC Source – EY Research
- 30. Vendor Landscape -eSignature Solutions Source – EY Research
- 31. Challenges facing Digitalonboarding
- 32. Variety of Riskareas - Arab Countries Survey insight What kinds of risks do Arab Countries anticipate from the implementation of E- KYC? 16 15 15 14 13 5 0 5 10 15 20 Cybersecurity Compliance Operational Data Protection IT Others NUMBER OF COUNTIES ANTICIPATING THE RISK TYPE OF RISK
- 33. Key Challenges inDigital onboarding, eKYC - No common Global standards for eKYC - Address Verification (Especially unbanked and underprivileged sections) - Periodic updation of eKYC and Legal documentation status - Disparities in eKYC compliance legislation and mandates (FATCA, GDPR, IFRS9 ) - Enhanced due diligence demands additional scrutiny and documentation - Cybersecurity provisioning is demanding (to avoid phishing, ID misuse etc) - Some regions present internet connectivity challenges prevent digital banking outreach
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- 35. • Digital identificationhas been established as a means to propel economies and create deep and lasting value to the quality of life of the citizens and also to the efficient and cost effective functioning of the Governments • Almost all Arab countries embarking upon digital identification for their citizens as part of their vision and digitization roadmap • The technical architecture towards achieving true customer digital on-boarding with robust e-KYC and compliance, AML, ATF deterrents is quite mature and several case studies are available to be adapted • Survey feedback from the Central banks of the Arab countries reveal that the vision of the Arab countries is to focus and lead in the domain of e-governance for betterment of the lives of their citizens and residents • The challenges are not unsurmountable and there are many enabling foundational technologies and vendors who can provide solutions in this space. Conclusion
- 36. Enabling a DigitalRevolution Source –Digital Mckinsey
- 37. Conclusion www.amf.org FintechWG@amf.org.ae This presentation isa product of the AMF Regional Fintech Technical Working group for the Arab Monetary Fund All product names, logos, brands, trademarks and registered trademarks referred in this document are property of their respective owners. All company, product and service names used are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement