Electronic Know Your Customer (e-KYC) System Revolutionizes Banking in Uganda
Kampala, Uganda
The banking sector in Uganda has witnessed a significant breakthrough with the adoption of an electronic Know Your Customer (e-KYC) system. Developed by Laboremus Uganda, a financial technology company facilitated by the Financial Sector Deepening (FSD) Uganda, this innovative system has reduced fraud by more than 90 percent.
Introduction to e-KYC System
The e-KYC system was contracted by the Bank of Uganda and the Uganda Bankers Association in 2019 to make customer identification more efficient, faster, and cheaper. The system has been implemented by 25 out of 36 financial institutions supervised by BOU, with another eight banks in the process of installing it.
Key Features of e-KYC System
- Enables users to verify the identity of customers and authenticate financial transactions with ease
- Uses NIRA’s existing records and the National ID card system to validate customer identity
- Provides seamless remote onboarding of customers into the formal financial system, boosting financial inclusion in Uganda
- Allows banks to verify a customer’s identity automatically and in seconds using their National ID Number (NIN), card number, names, and date of birth
Benefits of e-KYC System
- Enhances security of transactions by up to 90 percent for institutions that have fully adopted the system
- Provides insight into financial-related habits such as saving, spending, income sources among others
- Enables lenders to make informed decisions concerning products for their customers
Expansion of e-KYC System
Rashmi Pillai, Executive Director, FSD Uganda emphasized the need to expand the e-KYC system to other lending institutions, including SACCOs and Village Savings and Lending Associations, to include more Ugandans outside the banking sector.
Conclusion
The e-KYC system has contributed significantly to better customer experience and improvements in financial inclusion numbers. As Uganda Bankers Association Chief Executive Wilbrod Owor noted, while there is still room for enhancement through collaborations with other stakeholders and institutions, the e-KYC system has revolutionized the banking sector in Uganda.