MAS working closely with local and foreign banks to explore a Banking KYC Shared-Services Utility
Featured image via Singapore FinTech Festival’s Facebook page.
Mr. Ravi Menon, Managing Director, Monetary Authority of Singapore (MAS), shared at the opening of the Singapore FinTech Festival 2017 about the KYC utility that would enhance customer on-boarding. “Know Your Customer” (KYC) is one of the biggest problems and pain points in the financial industry – it is an obligation in any customer on-boarding but the process is costly, laborious, duplicative, and still not all that effective in detecting tax evasion or money laundering.
The Singapore Government has taken the first step with MyInfo – a single platform containing personal data submitted to and verified by the government. MAS and GovTech have done a pilot with several banks to enable customers to open a bank account online using MyInfo. The pilot saw application timings shortened by as much as 80%.
As the next step, MAS is working closely with local and foreign banks to explore a Banking KYC Shared-Services Utility that will streamline end-to-end KYC. This means centralising processes such as leveraging on MyInfo for customer identification and verification; collecting and validating KYC documents; and screening against sanctions and blacklists.
The Banking KYC Utility is potentially a transformative project, as it will harmonise and enhance KYC checks across the industry, improve the quality of risk management while reducing cost and time taken. If all goes to plan, the KYC Shared-Services Utility will be in place next year.
Another area that Mr. Menon spoke about that could be transformed was that of trade finance because currently, it is still largely paper-based and this is not only inefficient, but increases risks such as fraud and duplicate invoicing. Blockchain technology offers good promise to make trade finance safer and more efficient. Last year, DBS Bank and Standard Chartered Bank completed a proof-of-concept that demonstrated how blockchain technology could enable banks to detect if an invoice had already been financed. Shortly after, HSBC and Bank of America did a proof-of-concept that showed how trade finance processes could be streamlined using blockchains and smart contracts.
Building on these, MAS and the Hong Kong Monetary Authority will jointly develop the Global Trade Connectivity Network, a cross-border platform for trade finance using distributed ledger technology. The development of business and technical models for the GTCN is expected to conclude in Q1 2018. The GTCN is expected to go live by early 2019, to tie in with the targeted go-live dates of the Trade Finance Modules on the National Trade Platform in Singapore and the Hong Kong Trade Finance Platform.