Karachi, December 18, 2023 – The State Bank of Pakistan (SBP) has granted approval for banks to leverage a shared platform for Know Your Customer (KYC) and Customer Due Diligence (CDD).
This development is aimed at enhancing efficiency and standardizing processes in the banking industry.
The central bank, in a circular issued on Monday, highlighted its commitment to strengthening the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime over the years. As part of this ongoing effort, the SBP has now empowered banks to collaborate with third-party financial institutions for the execution of effective and efficient KYC/CDD procedures.
To spearhead this initiative and bring about further efficiency in KYC and onboarding processes, the Pakistan Banks Association (PBA), under the guidance of the SBP, has taken the lead in developing a cutting-edge “shared e-KYC platform.” This platform is poised to deliver numerous benefits to banks, including the timely exchange and updating of customer KYC/CDD information across the banking sector through a secure digital channel.
One of the key features of the shared e-KYC platform is its foundation on Distributed Ledger Technology (DLT), a decentralized approach that ensures customer data is securely stored within individual banks. This eliminates the need for a central entity to house critical customer information, thereby addressing concerns related to data security and privacy.
Crucially, the data stored on the shared platform will only be accessible with explicit consent from the customers, safeguarding their rights and privacy. This customer-centric approach reflects the SBP’s commitment to maintaining the highest standards of data protection and security.
The shared e-KYC platform promises to standardize KYC/CDD data, resulting in a more seamless and uniform customer onboarding experience across the banking industry. Moreover, the platform aims to generate substantial cost savings for banks by optimizing resources and reducing redundancy in customer verification processes.
In light of the transformative potential of the shared e-KYC platform, banks are strongly encouraged to join this innovative initiative. The SBP advises banks to allocate the necessary financial, technological, and human resources to ensure the timely and effective implementation of the platform, underlining the strategic importance of this collaborative effort.
This development marks a significant leap forward in the digitization of banking processes in Pakistan. The shared e-KYC platform not only aligns with global best practices but also positions the country’s banking sector at the forefront of technological innovation. As banks embark on this collective journey, the shared e-KYC platform is poised to redefine the landscape of customer verification, setting new benchmarks for efficiency, security, and customer experience in the financial services industry.
