Sri Lankan mobile banking app innovation stymied by regulations
ECONOMYNEXT – FriMi, a Sri Lankan mobile banking app, brought by a domestic commercial bank, is facing difficulties in digital innovation due to obstacles from existing banking regulations, an official said.
FriMi, a mobile app developed by Nations Trust Bank, can do a variety of actions without a customer visiting a bank but existing regulations require physical documents for procedures such as ‘Know Your Customer (KYC) rules.
"We brought in face recognition and biometrics and we incorporated all of that into the app," NTB’s Digital Head Nazeem Mohammed told an economic forum organized by Sri Lanka’s Ceylon Chamber of Commerce.
"But along the way the regulators told us ‘This is not good enough. You need to go back to physical KYC’."
He said FriMi is now combining allowed digital processes with the required physical measures.
Mohammed said he does not want to get into trouble with regulators over the issue.
"I don’t want to really get into conflict but I will tell you what makes digital KYC better than physical KYC," he said.
"Look at a branch, a customer walks up to a teller, or someone comes to open an account. You look at the ID. This was ID taken when the person was 18 years.
"Can you actually recognize the person in the ID and go ahead? That’s very difficult. That’s physical KYC."
He said digital innovations makes decision processes better.
"We are in communication with the regulators all the time and presenting to them the case of digital KYCs being better than physical KYCs," Mohammed said.
Frimi was developed by Nation’s Trust Bank to sit on top of the traditional banking infrastructure, he said.
"Your money is safe. It goes into the bank, sits in a bank, sits in a saving account, and regulated by the regulator. Has to go through all the checks and balances," he said.
The central bank has said it will make a ‘sand-box’ to allow innovation in banking. (Colombo/Sept17/2018)