On 8 February 2022, the Monetary Authority of Singapore (MAS) announced new recommendations companies should take regarding Non-Face-to-Face (NFTF) Customer Due Diligence (CDD) Measures. They highly encourage the responsible adoption of new technologies – such as e-signatures, liveness detection tests, and Optical Character Recognition (OCR) Technologies. This announcement comes as more financial institutions opt for the use of digital onboarding as part of their CDD Measures.
So what is digital onboarding? What should businesses be on the lookout for when implementing these new technologies throughout the onboarding process? In line with MAS regulations and Regtank’s expertise, let’s break down digital onboarding.
All About Digital Onboarding
Digital Onboarding is defined as the crucial user-organisation interaction that occurs when a company welcomes new customers, ensuring the company’s security and the customer’s integration as a valid user. The user provides Personally Identifiable Information (PII), which can identify them in the future. IP addresses, login IDs, social media posts, and digital photographs are examples of PII. PII can also include geolocation, biometric, and behavioural data. Customers may also be subjected to Facial Detection and Optical Character Recognition (OCR) checks.
Effects of Digital Onboarding on the Industry
In the compliance industry, digital onboarding has been a transformative force. One key point is that digital onboarding modules have allowed technology-heavy organisations to better track their consumers and expedite what would otherwise be a time-consuming process for them. It’s critical to transform a procedure into a rapid and seamless version, especially as the Covid-19 pandemic continues to spread and most businesses are migrating their operations online.
Benefits of Digital Onboarding
By contributing many positive effects, digital onboarding distinctly offers several benefits. They are:
- Straight-through efficiency: The fraction of transactions that do not require manual processing is known as straight-through processing. The onboarding process can be automated using digital onboarding, eliminating the need for manual intervention.
- Safe and secure application programming interface (API) connectivity: API allows data to connect to programs without requiring the creation of additional connectivity infrastructure. Data may be accessed from a single location, providing for the most efficient use of software and data. It’s critical to keep sensitive information protected from criminals with malicious intent.
- Improved experience for customers: Digital onboarding has proven to be incredibly beneficial to organisations to increase conversion rates and client retention. Digital onboarding has been widely embraced in the financial industry since it provides a smooth user experience while also protecting against money laundering methods.
As digital onboarding is still relatively new in the market, customers have fled because of poorly constructed digital onboarding platforms. Because a poorly designed digital onboarding process might hinder sales conversion, conversion rate optimization (CRO) is crucial. Systems with effective user interface designs are simple to understand and use, resulting in a pleasant client experience. Digital onboarding can also meet stringent regulatory criteria while also saving money.
MAS Recommendations to Digital Onboarding
MAS observes that many financial institutions perform this by integrating the use of MyInfo as part of their onboarding process and supplementing this information with additional checks, such as the siting of original documents.
Sometimes, companies even opt for video-conferencing to onboard customers instead of physical meetings – but as MAS warns, this may not detect and mitigate frauds or impersonation risks. Instead, they recommend that this be supplemented with additional checks, such as verifying customers’ information against a reliable and independent database or performing a checksum digit test to identify errors in customers’ identification documents.
MAS also highlights that CDD documents that cannot be verified against a registry or lack the requisite authenticity markers should not be verified purely via video conferencing. Instead, companies need to support this with additional measures to verify that the soft copy documents are genuine. This can be done either by obtaining an original certified true copy or having a digital signature or watermarks of a qualified person to certify the authenticity of the documents.
They also recommend the use of new technology solutions that can be purchased from third-party solution providers like Regtank or developed in-house. This includes Liveness detection technology that uses algorithms to analyse data collected from biometric sensors to verify if the company is interfacing with an actual customer or an impersonation.
While MAS acknowledges the efficiency that new technologies have brought to Digital Onboarding, they also forewarn the importance of enhancing internal controls and not relying solely on technology service providers to arrive at a conclusion.
Instead, companies should have additional measures in place to ensure control such as requiring customers to make an initial deposit into the account with the company from funds held in a bank account in Singapore or performing a call-back to the customer using a telephone number that can be independently verified.
Regtank’s Digital Onboarding Functions
Regtank’s Digital Onboarding tool uses our very own API and client interface to onboard new customers remotely. Compliance Officers can use this tool to digitally onboard customers by examining their details and verifying their identity. The process is:
- Compliance Officers must request the Onboarding API from Regtank’s backend to provide it to their customers. The Compliance Officers will then be given a link for their usage in digitally onboarding the clients.
- The customer must fill in their information after receiving the link from the Compliance Officer. A personal identity card is required to authenticate a consumer, and a Liveness Test is performed. The customer’s information will be uploaded to Regtank’s system for evaluation by Compliance Officers once they have successfully validated their identification.
- Compliance Officers can access each customer’s liveness profile on the client portal by clicking on the user’s Liveness ID. After reading the customer profile, the officer might proceed to conduct KYC and accept or reject the consumer
Regtank’s digital onboarding system allows for the process to be completed easily and conveniently, within 3 simple steps. Contact us at firstname.lastname@example.org for a complimentary demonstration today!
Editor’s Note: This post was originally published in July 2021 and has been updated for accuracy and comprehensiveness.