How eKYC is Simplifying Financial Access in Africa

Surge in eKYC Demand as Businesses Go Digital

African businesses are rapidly adopting digital solutions, driving a surge in demand for secure and efficient eKYC (electronic Know Your Customer) verification. Smile ID, a leading identity verification provider, reported a 50% increase in KYC checks during the first half of 2023 compared to the same period in 2022. This indicates a significant rise in digital identity verification across the continent.

Improved Customer Experience, Reduced Fraud

Smile ID’s report, “State of KYC in Africa H1 2023,” highlights the benefits of eKYC solutions. Businesses are experiencing faster onboarding times (average of 1.93 seconds for common IDs in major markets) and a reduction in fraudulent attempts. Fraudulent onboarding across Africa dropped from 28% in 2022 to 23% in H1 2023.

Biometric Fraud Trends

The report also sheds light on emerging fraud trends. Biometric attempts mainly targeted national IDs from Kenya, Nigeria, and South Africa. The Buy Now, Pay Later (BNPL) sector witnessed a significant decrease in fraud (from 37% to 4%), while cryptocurrency (15%) and payments/remittances (13%) sectors still grapple with higher rates.

Kenya’s Rising Fraud, South Africa’s Success

Interestingly, Kenya, which had record-low fraud numbers in H2 2022, is experiencing a rise again (10% in January to 17% in June 2023). This makes it the highest-risk country for ID fraud in the study. Conversely, South Africa, previously the highest-risk nation, saw a significant drop (from 17% to 8%) in fraud attempts, becoming the region’s leader in secure onboarding.

Governments Embrace Digital Identity

Across Africa, governments are implementing digital identity systems to keep pace with the digital transformation. Ethiopia’s “Fayda” program aims to register all eligible adults by 2025. Kenya is also rolling out a new digital ID system, and Somalia recently launched its biometric ID card program. These initiatives are expected to further accelerate financial inclusion on the continent.

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