From my personal experience, it would take up to four working days to open an account with a bank or a wealth management firm in Nigeria.
That's because of the Know Your Customer (KYC) check, a mandatory process of identifying and verifying a customer's or client's identity when opening an account and periodically over time.
Usually, customers are required to manually fill out forms, submit a passport photograph, a recent utility bill, and a valid means of identification. While some customers patiently scale through this rigour, 15-30% of customers who start the KYC process do not complete it, per a KPMG study.
As a result, customers are denied financial inclusivity and may potentially remain unbanked, even as the discontinuation of the KYC process comes at a cost to banks. According to the 2021 Global Findex Report released by the World Bank, Nigeria, Bangladesh, China, India, Indonesia, Mexico, and Pakistan were listed as countries with half of the 1.7 billion unbanked people in the world, with the majority being women.
To solve this problem, a KPMG study recommends that banks should use shared KYC utility, and adopt machine learning, artificial intelligence, and robotics-backed solutions.
Already, the KYC conundrum is creating opportunities for innovation, with fintech startups and challenger banks attempting to provide digital identity solutions using machine learning and artificial intelligence to drive real financial inclusion in Africa and other emerging markets.
This week on The Draft, a Nigerian fintech raised $13 million to expand its financial offering across Africa and promote financial inclusion. We covered that story this week on Techloy.com alongside other top stories and deals.
To more inclusive banking for all!