What is eKYC (Electronic Know Your Customer)?
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What is eKYC (Electronic Know Your Customer)?

February 5, 2022


The Electronic Know Your Customer or eKYC is a paperless process implemented by financial institutions for identity verification and monitoring customers' transaction activities. In the past, the traditional KYC process used to require in-person verification (esp. when a customer wants to open an account), but now, the onboarding process could entirely be done online. eKYC eliminates the hassle needed during the customer verification process, as documents and other information provided digitally by potential customers can be synced immediately with their trusted database. In a matter of seconds, the eKYC verification process is completed and approved customers could open their account in just a few hours or so.

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How does the eKYC verification process work?

Generally, there are several steps within the eKYC process:

  • Requesting information from the customer and/or entity
  • Identifying the account owner and verify documents and personal data submitted by customers
  • Constantly update data and observe data obtained from approved customers


However, the process of data verification will vary from country to country. In India, they utilize what is called an Aadhaar-based eKYC, a 12-digit individual authentication number issued by the Unique Identification Authority of India (UIDAI) on behalf of the Government of India. The financial service providers then could run through the potential customer's Aadhaar number via the UIDAI's database, providing their proof of identity and address in India immediately.


On the other hand, in Indonesia, the online eKYC verification process tend to vary from institution to institution. However, generally most of them will require potential customers to upload photos of their e-KTP (lit. electronic Indonesian Identity Card) and a personal selfie. The e-KTP is already linked to the government's database, where each card contains the biodata, portrait, digital signature, retina image and 10 finger prints (left and right hand) of the potential customer. This information can be accessed by licensed institutions immediately as well.


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Methods of eKYC authentication: Biometric vs. OTP

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Although eKYC authentication can be done through several methods, there are two that are commonly used by companies: biometric and OTP (one-time password).

Biometric authentication

Biometric is used to digitally measure and analyze the physical characteristics of the person who is in identification. Several methods of authentication include scanning fingerprints, facial patterns, retina images and voice pattern recognition. As long as the potential customers have access to a computer or mobile device that's connected online, service providers can instantly verify their identity against their trusted database. It's an efficient and secure method that's offered by many services across the globe.

OTP authentication

Through this authentication process, potential customers first must register their active mobile number in the service providers' database. Afterwards, an automated OTP will usually be delivered via SMS or instant messaging, which can eventually be used each time when customers want to login or perform any banking transactions.


What are the main advantages of eKYC?

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If you're looking to fully implement eKYC into your business or simply looking to provide your customers alternatives to offline KYC procedures, there's certainly a good number of advantages to do so.


One of the first ones is the enhanced security whilst keeping the entire process simple. You can still retrieve data on your customers' identity, financial activities and potential risks just like if you're doing it

via a conventional KYC registration process, but now you can do it in a matter of a few clicks. It will be entirely secure too, as it's connected to a trusted database in the country of your choice.


Not only this, eKYC has made the process of submitting necessary documents a lot more cost-efficient. Modern high-quality cameras and scanners could now help you with virtual document verification, facial recognition, biometrics and more, which require less manpower and/or other related costs to this process.


Lastly, this process is necessary to monitor the possibility of money laundering and identity theft through fictitious accounts. Being able to verify a customer's identity and do continuous monitoring online makes it easier for your company to spot any suspicious activities and risks associated with them, which might be one of the biggest advantages to start applying electronic KYC in your business.


If you're looking for a trustworthy API service provider that can help you with providing a smooth eKYC verification and onboarding process for your customers, Ayoconnect will be your best choice. We are trusted by more than 200+ businesses across Indonesia and Southeast Asia as a whole, and we will ensure that you can obtain access to trusted databases so you can verify your potential customers accurately.


For more information, give us a chat directly here!