Know-your-customer project hits speed bump

Singapore

THE Monetary Authority of Singapore (MAS) has hit a snag with its proposed centralised know-your-customer (KYC) utility that it had hoped to launch this year.

The shared KYC utility was meant to allow financial institutions to identify and verify potential customers' details in a more seamless way.

MAS managing director Ravi Menon told The Business Times that the challenge in setting up the project has come down to cost.

"That's a problem we've been working at with the banks. As with many efforts of an experimental nature, this one has hit a snag. The problem is not the technology, it's the cost. We've got to find another way of designing the architecture to reduce the cost."

But he added that "setbacks are an inherent part of the innovation process".

The KYC utility would have created a more efficient way of checking against sanctions and blacklists. It could fundamentally change the way banks labour through documents to block illicit funds out of money laundering or terrorism-financing activities from being channelled through the banking system here.

The KYC utility idea was announced officially at the Singapore Fintech Festival in 2017.

Mr Menon then said that the service would be "transformative". Besides harmonising and enhancing KYC checks across the industry, the service was meant to raise the quality of risk management, as well as reduce cost and processing time.

He told BT that greater complications arose from streamlining KYC processes for corporates than for individuals.

Financial institutions would, among other things, have to figure out the beneficial owners of entities such as shell companies, which creates complications in establishing credentials.

To be sure, there have some steps taken by banks to streamline the opening of accounts for certain corporate customers.

OCBC announced this month that from November, small and medium enterprises will be able to instantly open business accounts online through OCBC, as the bank leverages Singapore's national data repository, MyInfo.

But there have been surer moves to quicken the on-boarding process for individuals. Indeed, some financial institutions and fintechs now offer instant online verification, again by tapping on MyInfo.

TransferWise in October said it would link up with MyInfo for its one-click processing.

Not to be outdone, DBS this month also launched an online application service that will allow it to provide new-to-bank and existing customers instant approval for DBS and POSB credit card applications, as well as enable customers to open a DBS Cashline immediately.

DBS said the KYC processes are also automated, while meeting MAS' compliance standards.

UOB has begun integrating MyInfo into its digital application and approval processes for all savings and current accounts, as well as car loans, from July this year. It followed up with using MyInfo for home loans in August, and for credit cards in September.

OCBC has since June allowed customers to apply for its OCBC 360 Account instantly through the use of MyInfo.