Most banks yet to adopt electronic KYC

Jannatul Islam

4 April, 2021 12:00 AM printer

Most banks yet to adopt electronic KYC

Most of the banks in the country are yet to implement the electronic KYC (know your customer) system in customer information management despite Bangladesh Bank’s instructions issued over a year ago.

EKYC is a paperless process of instant verification with the national identity database to minimise the costs and official bureaucracy in boarding customer information.

In January 2020, Bangladesh Bank directed all banks and non-bank financial institutions to implement the service within December 2020 following the guideline of the Bangladesh Financial Intelligence Unit (BFIU).

Only 5-6 banks out of 61 scheduled banks and 34 non-bank financial institutions have implemented the services so far.

The mobile financial service providers introduced the EKYC in form of Unstructured Supplementary Service Data (USSD) with a little chance to verify original customers though the BB guideline asked the service providers to verify user identity.

Bangladesh Bank executive director Serajul Islam said the central bank has introduced the guideline for EKYC to make a uniform process of customer inclusion as the financial institutes used to maintain different forms for this purpose.

“KYC is basic for banking to identify the credit and other services. In last one year, some banks tried to follow the BFIU guideline in developing eKYC,” Serajul Islam told the Daily Sun.

State-run Sonali Bank, privately run Prime Bank, City Bank, Eastern Bank Limited, Islami Bank Bangladesh and Social Islami Bank introduced the eKYC.

Besides, almost all mobile financial service providers introduced the paperless inclusion system through NID server verification and mobile network providers.

In the case of customer on-boarding through mobile network operators, the MFS operators miss the cross-checking of user identification against the registered numbers.

Kona Software Lab Managing Director Minaoar Hossain Tanzil said the electronic KYC is a benchmark decision from Bangladesh Bank to ensure financial inclusion using a paperless method.

“Every new thing has challenges. Bangladesh Bank issued policy. But the implementation depends on the interest of the banks. Some banks have started rolling out this service. All the banks have to adopted the EKYC,” Minaoar Hossain told the Daily Sun.