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Vietnam’s Credit Institutions Implement Electronic Know Your Customer (eKYC) for Remote Account Opening

Effective March 15, 2021, the State Bank of Vietnam (SBV) has implemented electronic know your customer (eKYC) for credit institutions to open remote accounts for customers. This move aims to develop digital banking and enhance financial inclusion in the country.

What is eKYC?

According to Banking Plus, eKYC is an online customer identification process that enables credit institutions to verify customer information electronically, reducing paperwork and increasing efficiency. The technology has been piloted by around 10 commercial banks since July 2020, with impressive results.

Goals of the SBV

The SBV’s goal is to automate at least 20% of banking processes by 2020 and increase this ratio to 35% by 2025. To achieve this target, the regulator has issued several circulars, including Circular 16/2020/TT-NHNN, which outlines guidelines for opening individual payment accounts using eKYC.

Circular 16: Guidelines for Opening Individual Payment Accounts

Under Circular 16, banks must:

  • Assess risks based on technological conditions
  • Determine the scope of use before applying transaction limits via electronic payment accounts
  • Set a total transaction value limit (debit) per month per customer of VND 100 million (approximately USD 4,300)
  • Consider special cases with additional risk prevention measures

Benefits of eKYC

The benefits of eKYC have been significant, including:

  • A surge in new customers and transactions via electronic channels such as mobile banking and internet banking
  • Payment transactions via mobile banking increased by nearly 124% in volume and 126% in value compared to 2019

Challenges of Implementing eKYC

However, experts warn that implementing eKYC is not easy and requires significant investment in:

  • Technology infrastructure
  • Information systems
  • Teamwork and expertise
  • Big data systems capable of sharing and connecting with other banks, relevant ministries, and agencies to ensure the accuracy of online verifications

Conclusion

The implementation of eKYC is expected to boost financial inclusion and digital banking adoption in Vietnam, while also enhancing customer experience and reducing risks associated with remote account opening.