The Central Bank of Kenya (CBK) has signed a Memorandum of Understanding (MoU) with the Monetary Authority of Singapore (MAS) in efforts to develop a new system that will enable banks to identify clients electronically.
The partnership between CBK and MAS is set to develop the new system that will digitize the ordinary Know Your Customer (KYC)which involves identification, data and electronic procedures.
CBK Governor Patrick Njoroge said he expects the collaboration to lay the building blocks for the push to universal financial inclusion.
“Collaboration offers the best chance for creating an effective eco-system for financial innovation. In 2007, Africa became the cradle of fintech with the launch of M-Pesa which has continued to spur additional innovation,” he said.
Current manual procedures of KYC rely solely on the information provided by customers or clients to disclose their identities. This process is unreliable and costly in terms of time and money.
The new infrastructure, also known as e-KYC will also feed into the famous ‘Huduma Namba’ the digital identity system that the government has been trying to develop.
The MoU was signed at the presence of President Uhuru Kenyatta, during the two-day Afro-Asia Fintech Festival at the Kenya School of Monetary Studies in Nairobi which was co-hosted by CBK and MAS.
In his speech, the president pointed out that the new KYC system would probably fit into the government’s digital system.
“This initiative between our two central banks aligns well with the ongoing drive by my government to introduce a ‘single source of truth’ digital identity,” he said.
“It will also be leveraged by the private sector to provide faster and more secure transactions particularly in the financial sector,” president Uhuru added.
The central bank of Singapore will provide expert assistance to CBK to help the Kenyan bank control the illicit flow of money. The Singaporean bank had also adopted the digital ID system in Singapore.
The e-KYC will enable banks and other financial institutions to approve the credibility of the information provided by their customers or clients.
According to President Uhuru Kenyatta, the MoU has laid a solid foundation for joint innovation projects and the application of emerging digital technologies. These projects will enhance the digital infrastructure in both countries and catalyze trade and investments between Asia and Africa.