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NIRA to Authenticate Customer Data on Behalf of Banks

Bank of Uganda has announced it is moving to ease customer identification for all banking institutions under its supervision by implementing a digital identification application that draws on data from the National Identification and Registration Authority(NIRA).

The initiative known as Know Your Customer(KYC) is a joint innovation by Bank of Uganda(BOU), Uganda Bankers Association(UBA) and Financial Sector Deepening Uganda (FSDU), in partnership with NIRA.  Under the arrangement, BOU-supervised financial institutions and other authorized service providers shall collect the pre-agreed customer information, and then submit it to NIRA through the e-KYC system hosted at BOU for authentication.

Launching the e-system at Golden Tulip Hotel in Kampala yesterday, Bank of Uganda  Executive Director Bank Supervision Tumubweinee Twinemanzi noted that the sustainable delivery of financial services significantly relies on the ease of uniquely identifying customers and that the absence of a flexible, timely and cost-effective means of verifying the identity of consumers of financial services has been a major and continuing constraint to financial inclusion and credit growth in Uganda.

Last year, a report by FSDU found that of Uganda’s adult population (those aged 18 and above), only 11% used bank-provided financial services, while only 9% had bank accounts. In addition to the limited penetration of formal banking institutions in rural areas, the low uptake of financial services from banks has often been blamed on the reluctance of banks to lend to most consumers considered high-risk thanks to their lack of collateral and verifiable personal records and information.

Now, Twinemanzi argues that with the e-KYC platform, NIRA will be able to aid the verification and authentication of customers’ data in real-time, enabling the inclusion into the financial system of these consumers still dependent on manual KYC processes and procedures.

“As you will recall, the Government of Uganda rolled out the National IDs under the Registration of Persons Act, 2015. Provisions within this law require the use of a National ID and invariably the associated NIN, to access certain services, including those of a financial nature. Furthermore, this law, established the National ID register as the single true source of information about all persons resident in Uganda,” Twinemanzi said in a statement.

He noted that even as they(BOU) await the system’s full operationalization, other non-regulated and non-traditional financial services providers such as SACCOs, were already submitting requests to beaded on the list of financial institutions to benefit from this service. He assured stakeholders that BOU would support continued innovations in the financial sector towards expanding access to financial services, noting that, “The Bank is cognizant of the massive benefits that come with automation particularly in this digital era.”

The e-KYC system will be designed and set up by Laboremus Uganda, a specialist IT firm, and will be jointly supervised by Bank of Uganda, Financial Sector Deepening Uganda, and Uganda Bankers’ Association.

 

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