Identity Proofing for COVID-19 Recovery
Digital identity systems typically rely on more robust methods for identification and verification than traditional analogue systems but despite this, many financial service providers (FSPs) in Africa still rely on analogue “Know-Your-Customer” (KYC)” processes; collecting specific documents before allowing customers to open an account.
These outdated customer-due-diligence (CDD) requirements are resulting in financial exclusion and the situation has been exacerbated in countries that imposed lockdowns or stringent social distancing in response to the Coronavirus pandemic as most FSPs didn’t have systems set up to undertake this process remotely.
FSPs need to transform their approach to CDD to minimize business interruption in the COVID-19 environment. In the longer term, regulation and the market need to align with the FATF recommendations and more particularly, guidance on digital identity, by promoting appropriate use of technology to identify and verify consumers in a manner that corresponds to risk. Digital identity systems use additional data collected during authentication to continuously update and strengthen the identity profile - a process known as identity proofing. Read this note for actionable interventions that different market players can take in transitioning towards the use of digital systems for identity proofing.