Remote identification in Ukrainian banks – is it easy to become an online customer?

Back in 2020, Ukrainian legislation allowed banks to establish business relationships with new customers and open accounts for them completely remotely. Moreover, banks were even offered several options for how to conduct remote identification without the physical presence of the customer, namely:

-   Video verificatiion;

-   Selfie with liveness detection technology + sharing of electronic documents by the Client from the Dia application, or downloading copies of paper documents and signing them using EDS;

-   Authorization via Bank ID + certification of received document copies using EDS.

Nevertheless, as of the beginning of 2022, no more than 10 banks out of 72 registered in Ukraine were able to establish and launch these processes.

Remote identification allows the client to open an account/card without physical presence in any bank that offers such a service. At the same time, banks do not need to incur additional costs for the development of the branch network and its maintenance, as they can attract customers without territorial binding. It would seem that in the conditions of a pandemic, this is the perfect formula for the development of the financial market, but then why is this rule not progessing too rapidly.

We`ll consider the main reasons:

-   Conservative and large banks need more time to sort out and organize remote identification in accordance with legal requirements. The resolution describes the procedure only at a high level, so banks need to independently analyze possible risks and make decisions on how this process can be implemented;

-   Ensuring the requirements necessary for remote identification, as a rule, requires significant improvements and changes on the part of the banking infrastructure;

-   The lack of certified solutions that allow determining the "liveness" of a customer during a selfie, or compare his face with a photo in a passport;

-   The need to keep an eye on new types of fraud that constantly appear in this process and resist them;

-   The need to use the client's EDS makes the process complicated and not user friendly.  In addition, most individuals do not use EDS, which makes the process inaccessible if they do not use electronic documents.;

-    Low financial literacy of consumers who are accustomed to classic service and are not just beginning to master digital channels;

-    No need to use banking services or have an account with more than one bank;

-    No smartphones or internet access.  According to recent statistical studies, about 7 million adults in the country do not have access to the Internet, and almost 9 million do not use smartphones.

Thus, it takes time for this process to be debugged, both on the part of banks and consumers. The implementation of remote onboarding by new banks will also promote competition in this direction and improve the process (it will become more seamless and faster for the customer).