Bank Negara Malaysia, the nation’s central bank, released a policy document on July 1, 2020, that covers electronic or digital know-your-customer (e-KYC) requirements.
The document is an update to the reserve bank’s earlier exposure draft from December 2019. The new policy went into effect immediately for all Malaysian financial service providers including local banks, insurance firms, remittance companies, money changers, and several other businesses.
The KYC policy document aims to improve standard customer verification processes for Malaysia’s Fintech industry participants. The new rules should make it easier to more accurately verify users’ IDs online.
Electronic KYC checks allow companies to complete their digital onboarding in a secure manner, which has become essential due to COVID-19 and resulting challenges. Most customers won’t be required to be physically present to complete KYC checks, which may be required before they can access certain financial services.
Digital onboarding of customers helps reduce operational costs for service providers. It also makes it more convenient for customers to sign up for new services.
The digital KYC policy document notes that Malaysian financial institutions may rely on humans to carry out customer ID verification checks, which may be done through video conferencing calls. Companies can also use AI, machine learning (ML) and predictive algorithms to manage the onboarding process.
The Malaysian reserve bank confirmed that the launch of e-KYC is consistent with the institution’s goal to support extensive digital offerings of financial services in the country.
Malaysia’s Fintech sector has continued to attract investments, despite the COVID-19 outbreak.
Great Eastern, the largest life insurance company in Singapore and Malaysia, recently revealed its plans to invest $70 million in Axiata Digital’s Fintech expansion plans.