• New entries are taking advantage of eKYC rules for current accounts as most incumbents ignored major frictions and customer pain points
• Biggest potential yet to emerge by meshing third party API connectivity with eKYC
• Banks could further look into integrating value-added services into the digital account opening processes

Opening unrestricted deposit accounts in emerging markets often resembles running the gauntlet. Customers often have to endure lengthy branch visits, tedious paperwork and long processing time before being able to fund the account and use the debit card. In addition, those accounts come with high minimum balances and initial deposits, which are out of reach for most low income workers and families.

In the last few years, regulators have eased restrictions on know your customer/client (KYC) rules for deposit ‘lite’ accounts. These are savings account for microbusinesses and low-income households with no initial deposit and maintaining balance required and no maximum account balance and total deposit intake per year. Yet uptake of those accounts has been slow as most unbanked shun branches in general. And the target market for a large number of digital challenger banks are the income progressive, urban young professional – a turf commercial banks also are keen to cater to.

Progressive banks and a new breed of digital banks from Thailand, Indonesia and now the Philippines, are using more advanced technology compared to commercial banks by leveraging on program synthesis, natural language processing, optical character recognition (OCR) and machine learning capabilities to automate and optimise client onboarding, documentation and KYC processes. And they are able to convince regulators on a case-by-case basis that their technology stack allows exceptions to the general rule.

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Risk and Regulation,

Risk and Regulation,

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