The VPBank's eKYC helps customers open banking accounts without face-to-face meetings. — Photo courtesy of VPBank

Vũ Hoa

HÀ NỘI — The trend of integrating modern technologies in the banking industry has been indispensable to meet customers’ requirements for convenience in the Fourth Industrial Revolution era, especially in the context of the re-outbreak of the COVID-19 pandemic.

In the finance and banking industry, customers always want to experience good quality services with simplicity and convenience. Nobody wants to wait for hours at transaction offices just to perform simple tasks such as opening or closing an account. In addition, as the pandemic returned, many people now choose to self-service at home.

The launch of eKYC solution laid the first bricks to build digital banking foundations, and to automate the operation process of financial and banking enterprises. KYC or Know Your Customer is a legally mandatory customer identification process for many businesses, especially organisations with high customer information security such as finance and banking sector. eKYC, the process of an institution getting acquainted with their customer, though electronically is a superior level than KYC, allows users to complete the process easily, by simple manipulations on their mobile phone or computer with internet, anywhere.

In the past year, the race to launch digital banking and upgrade apps to super apps is getting hotter. Many banks said that 2020 is the year of digital transformation, focusing on investment in technology.

There are already the first banks in the market that allow customers to open online payment accounts (eKYC) for immediate payment transactions without waiting. With this account, users can immediately experience transactions such as transfer, bill payment and link with e-wallet with limits from VNĐ100 million to VNĐ300 million.

This can be seen as a turning point in technology in the experience of Vietnamese card users and a strong push to promote banking digitalisation, towards a cashless society in Vietnam.

Since the beginning of the year, a series of banks have launched digital banking experience services to customers such as VPBank, BIDV, Vietcombank, HDBank and Vietinbank.

A representative from VPBank, the first bank in Việt Nam deploying e-KYC told Việt Nam News that they use four technologies at the same time for opening online accounts including artificial intelligence (AI); OCR technology separating and comparing information on identity cards; biometrics technology to compare whether a photo is being taken with an identity card or not; and esignature.

“Frankly it has not fully addressed all requirements because regulations relating to esignature themselves have many problems. But we have solved more than 90 per cent of the regulations and possible risk situations in the future. We are confident that we have met the basics of the law and is the first bank to do so,” he said.

He added that VPBank had had five years implementing digital transformation, thus having a firm technology foundation and ready to catch new trends in the market.

“In three months of testing, we immediately conducted with customers who previously refused to use the service, the unexpected result was that about a half of them opened accounts, and of which nearly 50 per cent made transactions. With such fastidious customers, but still getting good results, was one of the foundations for us to be confident that we will do well in the future,” he said.

The bank plans to have about 300,000 new eKYC accounts, actively contributing to their business operations.

“Customer information security is an important task for banks when implementing eKYC. The bank ensures safety according to regulations of the State Bank of Việt Nam (SBV) for customers including identity and biometrics from information encryption to 3-layer security. VPBank has always paid attention to risk management. We are waiting for new regulations from the central bank to launch more diversified products on eKYC account,” he added.

He said eKYC has potential to maximise the bank's operating costs, and more importantly, will create a driving force for new customer growth, promoting creativity and competitiveness of the entire banking industry.

However, the competition will not be easy. From now to the end of next year, the concept of digital transformation will certainly be used a lot. Every bank says it will strengthen digital banking but digital transformation requires a long process and investment regarding all policies, people, processes and products.

A potential eKYC market

Phạm Tiến Dũng, director of the SBV’s Department of Payment told a recent e-payment forum that eKYC could be considered as a “parking ticket” for banks in digitalisation process.

According to the department’s statistics, Việt Nam currently has 88.5 million bank accounts. Only 63.7 per cent of Vietnamese adults have a bank account. Meanwhile, the rate of using smartphones in Việt Nam is very high. Therefore, eKYC would open up opportunities for banks to reach customers in locations where they do not have branches.

The digitalisation racing has been also an opportunity for eKYC developers.

Nguyễn Văn Việt, CEO and Co-Founder of Computer Vision Vietnam (CVS eKYC) which received US$500,000 investment from NextTech Group and Next100.tech fund told Việt Nam News that eKYC is a very important product in the digital banking ecosystem and the key of digital banking. The reason was that customers could not experience digital banking services if they don't open an account. ekyc is the first step for customers to open an account online. Without ekyc, customers still have to go to the transaction offices, reducing efficiency in developing other services relating to digital banks.

“The eKYC market has big potential as it is a new one in Việt Nam but being proven essential and effective in other countries. According to researches, eKYC helps reduce 90 per cent of costs in opening an account,” Việt said.

CVS eKYC has targeted to provide its services to small-and-medium enterprises and fintech. It would also co-operate with third party partner such as nganluong.vn to provide core technology product and integrated to customers’ solutions for banks.

“Noncash payment is a national strategy, so whether there is a COVID-19 or not, it is an inevitable trend to be implemented. However, it is true that the pandemic has helped accelerate this process 2-3 times faster. Many businesses that used to see if other companies have succeeded or not in applying eKYC, now they are studying to apply to their businesses. Recently, the number of clients seeking CVS is much larger, so the demand is great,” he added.

CVS eKYC targeted to become one of leading companies in the area in Southeast Asia in the next five years. It is studying Indonesian and Myanmar markets with support from its investor – NextTech which has a diversified product ecosystem and experiences in the markets. — VNS