What is Electronic Know Your Customer (e-KYC) and How It Can Help Your Business?


The advancement of the digital era has made everything faster and easier, especially in the financial sector. Changes from conventional to digital processes occurred in various business areas. As a result, economic growth in Indonesia has also experienced a significant increase. One of them is the implementation of KYC (Know Your Customer) digitization into e-KYC (electronic KYC).

E-KYC is an upgraded and more modern version of KYC than traditional KYC. KYC itself is a process commonly used in the financial sector to verify identity and check and identify customers. In addition, in banking this method is also used to monitor customer or customer transaction activities to avoid risks such as fraud or embezzlement of money. While electronic KYC is the same as conventional KYC, this method is also used to verify the identity of the customer, except that this process is carried out through electronic devices, so that the customer or customer does not need to go to a branch office or financial service provider and wait in line.

Legal Basis for the Implementation of e-KYC

Banks and financial service providers get various information about customers or customers such as identities, profiles, transaction patterns using the KYC method as a whole. KYC itself has a principle that is realized through Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD), such as the implementation of identification, verification, and monitoring of customer or customer transactions.

The implementation of KYC by banks is based on the policies stipulated in Article 2 of Law Number 7 of 1992 concerning Banking (Banking Law) as amended by Law Number 10 of 1998 and Law Number 11 of 2020 concerning Job Creation:

“Indonesian banks in conducting their business are based on economic democracy by using the principle of prudence.”

Meanwhile, the implementation of e-KYC is regulated in Financial Services Authority Regulation Number 12/POJK.01/2017 of 2017 concerning the Implementation of Anti-Money Laundering and Prevention of Terrorism Financing Programs in the Financial Services Sector (POJK APU-PPT) as amended by POJK Number 23/ POJK.01/2019, namely the process of verifying customer data by Banks or other financial service providers can be carried out through electronic means, for example video banking activities using devices belonging to financial service providers and interacting directly online with officers from the financial service provider.

Advantages and Disadvantages of Implementing e-KYC

The application of the electronic KYC method is very helpful in simplifying and accelerating financial activities. The following are the benefits of using e-KYC for financial and banking service providers as well as customers.

  • Cheaper in Cost

Companies do not need to pay for stationery or paper to print the forms, because the process is done online. In addition, customers or customers also do not need to pay transportation costs to visit the branch office.

  • Faster Process

The verification process for prospective customers or customers can be done easily and quickly through this e-KYC, especially when compared to manual KYC that can take a long time. Generally, the registration or registration process is only by uploading an ID card and selfie. Then, this data is inputted and will be recorded automatically in the system to make it easier to check back at a later time.

  • Lesser Risk of Money Laundering

With the e-KYC process, the potential for money laundering can be minimized because the data will be difficult to fake or manipulate. This is because population data has been integrated through the electronic ID card or E-KTP. In addition, at the time of registration, the customer or customer will be asked to send a face photo or make a video call, so that if the data does not match, the error will be caught. Therefore, the risk of data falsification can be significantly reduced.

In addition to its advantages, e-KYC also has several disadvantages, such as:

  • There are no rules that provide a definition of personal data, especially for personal data that is attached to an individual’s device.
  • There are no rules that limit banking applications from accessing features on prospective customers/customers’ devices during the e-KYC process.
  • SNI ISO/IEC 270001:2013 standards have not been implemented by all banks in Indonesia, especially for banks that have not fully provided digital services and implemented the e-KYC process.
  • The e-KYC process that has been implemented is sometimes still hampered because the technology and system used is not perfect.
  • In various areas the internet signal is not evenly distributed and adequate.
  • The system for the Directorate of Population and Civil Registration of the Ministry of Home Affairs has not yet been updated, which stores demographic data of prospective consumers.

From some of the information above, you can recognize and understand what electronic KYC is and its advantages and disadvantages. With e-KYC, the verification process can be done easily and quickly than conventional KYC. Therefore, AdIns offers a reliable Profind service for e-KYC and credit scoring processes. Reliable and trustworthy, Profind has been used by clients from all over Indonesia with satisfying and impressive results. For more information, you can contact AdIns via [email protected] or (021) 5367 3030.

If you are interested in KYC and how important it is for business, consider reading these two article as well!





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