Financial Crime World

Uganda Banks Urged to Embrace Electronic Know Your Customer (e-KYC) System to Boost Security and Financial Inclusion

The Uganda Bankers Association (UBA) has recommended that banks and other financial institutions fully adopt the electronic Know Your Customer (e-KYC) system to eliminate or prevent more than 90% of fraud from their operations.

What is e-KYC?

The e-KYC system was developed by Laboremus Uganda, a financial technology company, facilitated by the Financial Sector Deepening (FSD) Uganda. The system enables commercial banks and other financial institutions regulated by the Bank of Uganda to access the National Identification Database at the National Identification and Registration Authority (NIRA).

Benefits of e-KYC

  • Enhances security: Laboremus CEO Timothy Musoke said that each level or stage of implementation of the system provides up to 90% security.
  • Simplifies customer verification: The verification process happens automatically and in seconds, using the customer’s thumbprint to verify their identity.
  • Seamless remote onboarding: The solution allows for seamless remote onboarding of customers into the formal financial system.

Adoption of e-KYC

Currently, 25 out of 36 financial institutions supervised by the Bank of Uganda have taken on the system, while eight others are in the process of installing it.

Future Expansion Plans

The developers of the system believe that its use can be expanded to other lending institutions, including Savings and Credit Cooperative Societies (SACCOs) and Village Savings and Lending Associations, to include more Ugandans who are outside the banking sector. This could contribute to government programs under the National Development Plan (NDP) and the Parish Development Model (PDM), thereby contributing more to national development.

Quotes from Industry Experts

  • “The e-KYC system is another example of the need for collaboration between sectors, including banking and telecommunications.” - Wilbrod Owor, UBA CEO
  • “The e-KYC system can help lenders make decisions concerning products for their customers by understanding their financial-related habits…” - Rashmi Pillai, Executive Director at FSD Uganda
  • “The Central Bank of Uganda will support any idea aimed at strengthening the industry.” - Premon Ogwok, Senior Principal Bank Examiner at the Bank of Uganda