Bank of Uganda (BoU), in collaboration with Uganda Bankers’ Association (UBA) and Financial Sector Deepening Uganda (FSDU) on Friday signed a contract with Fintech Company, Laboremus Uganda to develop a digital ID verification system which will be used by all banks and licensed financial service providers in the country.
The system will function as a shared e-Gateway for all financial service providers.
It will be hosted at BoU and will interface with and use National Identification Registration Authority (NIRA)’ s existing records to help banks verify the identity of existing and prospective clients in account opening and transaction processing among others by offering a secure, multi factor digital authentication.
Speaking at the official signing ceremony for the partnership, Dr Twinemanzi Tumubweine said the new system will reduce on the bad loans experienced by banks where one customer borrows from different banks and fails to pay back.
“The financial card identification system that is currently in use is limited to credit customers and therefore does not wholly address the challenges of KYC (Know Your Customer),” he said.
“In addition, manual customer due diligence procedures have been exploited by fraudsters who employ cunning ways of impersonation to fraudulently access financial services at multiple locations
“The development means licensed financial service providers can speed up identity authentication processes, cut costs of previous length manual processes and increase reach particularly to previously unserved and underserved customer segments especially people living in rural areas or in diaspora,” said Rashmi Pillai, executive director FSDU.
She added that having the EKYC system will help policy makers to know the true extent of financial inclusion and hence draft policies based on actual information
“Digitising the customer verification process will simplify customer acquisition, increasing the provability of reaching more customers with formal financial inclusion” she added