As digital banking adoption accelerates across Asia-Pacific and other regions, financial institutions face growing pressure to deliver seamless online account opening experiences while maintaining strong security and regulatory compliance. Electronic know your customer (eKYC) solutions have emerged as a critical tool for balancing customer convenience with fraud prevention, helping banks streamline onboarding, reduce account abandonment, and meet increasingly complex compliance requirements.
An increasing number of virtual banks have emerged across the Asia-Pacific (APAC) region in recent years, disrupting the traditional banking model. The landscape is becoming more crowded as a result, making it important for banks to adopt digital banking technology solutions to remain competitive.
Starting a virtual bank or shifting a traditional bank digital is a massive task, and not every bank will be successful. Streamlining the digital onboarding experience while keeping fraud at bay will be critical for banks looking to succeed. With that in mind, Jumio recently released a comprehensive guide, “How eKYC is Streamlining Digital Banking: An Asia-Pacific Perspective,” which serves as a how-to guide for online identity verification and eKYC (electronic/online know your customer).
Virtual Banking Bring Opportunities and Challenges
Virtual banking brings access to unbanked and traditionally underserved markets, but also comes with a number of challenges. One of the largest and most time-consuming challenges for financial institutions is ensuring compliance with local and regional know your customer (KYC) and anti-money laundering (AML) regulations.
This is especially true because digital banking brings opportunities for sophisticated modern day fraudsters to attack. In fact, Experian’s 2019 Asia-Pacific Global Identity and Fraud report found that “50% of businesses surveyed in the Asia-Pacific saw an increase in fraud losses over the past 12 months from account originations and account takeovers.”
eKYC and AML compliance need to be delicately balanced with a smooth, financially feasible customer onboarding experience. Ultimately, financial institutions need a number of key ingredients to succeed in the virtual banking transformation, including:
- Targeting
- Mobile Transformation
- Digital Transformation
- Onboarding
- Brand Awareness
- Differentiation
- Compliance
- User Experience
- Fraud Detection
A Frictionless Onboarding Experience Reduces Account Abandonment
Customer acquisition is a leading challenge for digital banks, with online account abandonment drastically increasing customer acquisition costs. In 2019, Signicat found that approximately 40% of online applications are never completed, instead they are abandoned by potential customers. This is largely because account opening tends to be tedious, time-consuming, and cumbersome for customers.
Banks can reduce account abandonment rates by streamlining the onboarding process to enable the simple, secure, and convenient online banking experience modern consumers expect. This is easier said than done, however, as financial institutions in the APAC landscape must also comply with numerous stringent regulations. But there are ways that the digital onboarding experience can be streamlined to reduce account abandonment rates and associated costs, including:
- Covering all of APAC
- Enabling auto-ID capture
- Adopting more capture channels
- Providing clear instructions
- Eliminating unnecessary screens
- Providing instant feedback
- Utilizing intuitive liveness detections
- Reducing the need for manual review
Balancing User Experience with Fraud Detection is a Must
Prioritizing fraud detection that provides higher levels of identity assurance can add friction to the user experience, but is nonetheless important for financial institutions. This balancing act is possible, as the right technology stack can offer both fraud protection and a positive user experience. Financial institutions can measure the effectiveness of their eKYC solutions through the measurement of two statistics:
- False Acceptance Rate: the rate in which fraudsters/imposters are incorrectly accepted (false positives).
- False Rejection Rate: the rate in which legitimate users are incorrectly rejected (false negatives).
A full-stack eKYC solution brings orchestration and informed artificial intelligence (AI) to cut manual costs, comply with AML and other regulations, quickly and accurately detect fraud, and streamline the customer experience to reduce account abandonment.
Conclusion
Jumio’s guide delves deep into the pitfalls of homegrown disparate eKYC solutions, the components needed to stack up to a fully integrated solution, and a best-practices approach to online identity verification for eKYC.
The success of digital banking depends on more than simply moving services online. Financial institutions must create onboarding experiences that are fast, secure, and compliant while minimizing friction for legitimate customers. As fraud threats continue to evolve and competition among digital-first providers intensifies, robust eKYC and identity verification solutions will play an increasingly important role in helping banks attract customers, manage risk, and support long-term growth.
For more information on online identity verification and eKYC, complete the form below to download Jumio’s new guide.
Download the complimentary guide – “How eKYC is Streamlining Digital Banking: An Asia-Pacific Perspective.”
