As consumer demand for speed and convenience grows, eKYC in Singapore has become an essential process in the banking and financial services industry in Singapore, serving as a critical competitive differentiator among service providers.
What is eKYC?
eKYC or electronic know-your-customer refers to the use of digital technologies to verify the identity of a customer remotely. This process serves the same purpose as a traditional KYC protocol: to prevent fraud and identity theft while ensuring compliance with regulatory requirements.
Like traditional KYC, eKYC revolves around fundamental processes that include collecting customer information, validating the data and documents, and assessing client risk.
However, eKYC differs from traditional KYC in that rather than relying on in-person verification or physical documents, eKYC uses digital technologies and data sources to authenticate customer identities remotely. These systems are capable of automatically verifying identity documents, cross-check customer information against trusted databases, and even use biometric authentication for enhanced security.
By digitising the verification process, eKYC offers several advantages including improved efficiency and convenience, cost reduction, and regulatory compliance through detailed audit trails and the use of artificial intelligence (AI) to detect anomalies with greater accuracy.
A robust framework for eKYC
In Singapore, eKYC processes are well-established and play a crucial role in the financial sector. The Monetary Authority of Singapore (MAS) oversees KYC and anti-money laundering (AML) regulations, requiring financial institutions to adhere to strict guidelines to verify customer identities and monitor transactions.
MAS is proactively addressing emerging threats with innovative regulatory measures, including introducing new source-of-wealth (SoW) requirements in July 2024 to better assess customer risk, as well as rolling out in April 2024 the Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (COSMIC) platform, which allows financial institutions to share customer information to enhance the detection and prevention of financial crimes.
The National Anti-Money Laundering Strategy Singapore 2024, released in October, reaffirms Singapore’s commitment to a robust AML/counter-terrorist financing (CTF) framework, and emphasizes cross-sector collaboration, enhanced regulations and international cooperation.
National Digital Identity (NDI): a strong foundation for eKYC in Singapore
Singapore’s advanced National Digital Identity (NDI) framework provides a strong foundation for eKYC. The NDI features a set of tools designed to facilitate seamless customer onboarding, user authentication and digital authorization, supporting Singapore’s aspiration to develop a robust digital economy.
These tools include Singpass, a personal authentication system that allows users to access government and business services online through a single login; SGFinDex, a public digital infrastructure facilitating financial data management; Corppass, an authorization system allowing businesses to securely manage employee access to digital services; and Myinfo, a personal data sharing consent product, allowing citizens and residents to manage the use of their personal data for simpler online transactions.
These tools serve diverse use cases, including seamless customer onboarding through Myinfo, secure authentication and login through Singpass, and digital authorization and electronic signatures for fully digital, paperless and presence-less experiences.
eKYC solution providers in Singapore
In addition to the NDI infrastructure, Singapore’s advanced eKYC landscape is bolstered by a thriving regtech industry, which now comprises 64 players, according to the 2024 Singapore Fintech Report.
Among them popular eKYC solution providers in Singapore include, Jumio, Onfido, Know Your Customer, Ping Identity, Toppan ID Gate and more.
Complex and time-consuming eKYC processes: a barrier to digital banking adoption
Despite the strides made, eKYC in Singapore still faces challenges, with consumers expressing frustration over complex and time-consuming identity verification processes. According to a 2023 FICO survey, many consumers are opting for in-person applications for mortgages and loans due to cumbersome digital experiences when opening an account via mobile app or website.
24% of Singaporean consumers said they have abandoned credit card applications due to complex or time-consuming identity checks, and close to one in five (17%) have given up on mortgage loan applications for the same reason.
63% of Singaporean consumers expect to answer ten questions or less during a bank account application, or they will abandon the process. Additionally, about one in three Singaporeans will give up on a personal bank account application after ten minutes, regardless of the number of questions asked.
Frequent identity checks have also become a pain point, with one in five bank customers stopping or reducing their use of existing personal bank accounts and credit cards due to frustrations with identity verification processes.
