Understanding Capture and Validate KYC Processes

Recent GSMA research has found that, as of December 2018, consumers in at least 150 countries have to present a valid proof of identity (such as a national identity card or a passport) in order to subscribe to mobile services. Whilst governments can take different approaches to implementing SIM registration, we have asserted that ‘Capture and Validate’ (C&V) processes give the highest level of confidence that the person registering a SIM ‘is who they claim to be’. This is because C&V enables mobile network operators (MNOs) to validate their customers’ ID against a central government database, usually in real time. Globally, only 16 countries follow this approach.

There is anecdotal evidence to suggest that C&V processes – particularly when a high percentage of the population has access to official ID – can bring direct benefits to MNOs and other private sector organisations by decreasing administrative costs, reducing fraud, increasing revenue and widening the customer base. See for instance, the World Bank’s report on Private Sector Economic Impacts from Identification Systems. In our newest report we aimed to provide new evidence to support these claims; assess the impact these approaches have had on MNOs; examine the opportunities that might arise from C&V systems; and provide shared learnings for MNOs that might be required to implement a C&V SIM registration system in the near future.

With our research partner Futuresight, we conducted desk-based research and stakeholder interviews across nine countries that implement a C&V system: Ecuador, Peru, Senegal, Uganda, Bangladesh, India, Indonesia, Pakistan and Thailand. We then visited five of these countries – Pakistan, Bangladesh, Peru, Uganda and Senegal – in person to conduct structured interviews with individuals who possess particular knowledge of, and experience with, the local C&V system. Where possible, this included telecom regulators, national identity authorities and MNO representatives from numerous business functions.

Through this work, five key insights emerged:

  • Capture and Validate systems offer clear benefits to MNOs: Across all nine C&V countries, there was consensus amongst MNOs and other stakeholders that the system had delivered a more streamlined SIM registration process, a better on-boarding experience for customers, improvements to database management and a reduction in administration, transaction and compliance costs.
  • However, the benefits of Capture and Validate systems can be costly for MNOs: MNOs widely reported that they were required to cover all costs associated with implementing the new C&V system (including national re-registration drives), and almost all MNOs saw some reductions in their customer base.
  • The importance of careful and strategic implementation: The experiences of MNOs across all countries show that when implementing a new C&V system, collaboration – within the industry, as well as with the government and regulators – is critical for reducing implementation costs, setting shared objectives, creating positive incentives that motivate operators, and building consensus around how to develop the registration platform.
  • Future opportunities: Capture and Validate systems provide MNOs with unique opportunities to establish digital identities for their customers and provide access to new mobile services that generate both commercial and social impact. MNOs in Pakistan are already leveraging the C&V system to offer new identity-linked services to vulnerable segments of the population, such as social cash transfers delivered via mobile money. In other countries, MNO representatives participating in our research saw value in working with the GSMA to champion the development of new identity-linked services, or to help to address the barriers that prevent millions of individuals from accessing official proof of identity and registering for mobile services in their own name.

The GSMA Digital Identity team is committed to supporting focused research and advocacy work that allows MNOs to bring the benefits of digital identity to the poorest and hardest to reach individuals around the world. If you are a GSMA member or policymaker seeking to implement a C&V system and would like to learn more about this research project or the experiences of other C&V countries, please download our report or contact the Digital Identity team at digitalidentity@gsma.com.

This initiative is currently funded by the UK Department for International Development (DFID), and supported by the GSMA and its members.
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