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Daniel Zhou is the Solution Consulting Lead at ADVANCE.AI, where he leads the solutioning process — from understanding customer needs to designing and presenting tailored solutions that demonstrate the value of the company’s products to customers, while ensuring clients receive the most suitable product offerings to address operational risks and meet regulatory compliance standards effectively.

With over a decade of experience in presales leadership within the Fintech and Regtech domains, Daniel specializes in solution architecture design with a consultative approach for products including AML Sanction Screening, Digital Identity Verification, Transaction Fraud Monitoring, and Client Lifecycle Management systems.

Why Unified eKYC Platforms Are the Future of Digital Onboarding

As financial institutions, fintechs, and enterprises continue to expand in a hyperconnected world, one factor has emerged as non-negotiable: the ability to onboard legitimate customers quickly, securely, and seamlessly. Yet, for too many organisations, the onboarding experience remains fragmented, with multiple vendors, siloed systems, and duplicated checks leading to delays, drop-offs, and exposure to unnecessary risk.

The stakes couldn’t be higher. Customer onboarding is often the very first interaction users have with a bank, or financial services provider, making it a make-or-break moment for building relationships. A clunky, drawn-out verification process signals friction and inefficiency, while a fast, secure, and compliant onboarding flow communicates professionalism and inspires confidence from day one.

The High Costs of Fragmentation

To understand why unified platforms represent such a transformative opportunity, consider the typical fragmented onboarding workflow that plagues most organisations today. When a new user attempts to create an account, their journey triggers a disjointed series of handoffs:

1. Identity Verification

One vendor checks the ID document, but any formatting issue or blurry upload may require the customer to start over.

2. Liveness & Biometrics

A separate tool runs a face match or selfie check. Customers often get stuck here, forced to retake photos due to inconsistent thresholds across systems.

3. AML Screening

The verified data is then handed off to yet another provider for sanctions and PEP screening. Each handoff creates latency, and any mismatch in data formatting can trigger errors or manual reviews.

4. Fraud Risk Assessment

A different platform evaluates behavioural signals for synthetic or stolen identities. Without access to the earlier biometric context, fraud models may flag false positives—or worse, miss sophisticated patterns.

5. KYB/KYT Checks

For business clients, the process is even more complex, requiring additional vendors to vet corporate ownership structures, transaction flows, and counterparties.

Each handoff between these systems is a point of failure—a potential data drop, a latency lag, a compliance gap. Each requires separate integration, maintenance, and vendor management. Most critically, these systems often operate in silos, lacking a unified intelligence layer to contextualise data and identify sophisticated, cross-channel threats.

The Sobering Reality of Poor User Experience

The financial impact of this fragmentation is staggering across three key areas:

Customer Abandonment Crisis

Industry research reveals that many consumers abandon digital account opening processes that exceed 3-5 minutes, with some sectors experiencing abandonment rates exceeding 70%. Given that customer acquisition costs in banking average over $300 per account, these high abandonment rates represent substantial financial losses that directly impact profitability.

Escalating Fraud Losses

Sophisticated cybercriminal networks have accelerated fraud losses significantly. Synthetic identity fraud alone cost Americans $43 billion in 2023—a 13% increase from $23 billion in 2022. Even more concerning, $40 billion of the $1.3 trillion in digital payments assessed for fraud were confirmed as fraudulent transactions.

Compliance Cost Explosion

Many financial institutions continue relying on manual KYC review tasks, increasing regulatory non-compliance risks. This burden has intensified as federal banking regulators—including the Monetary Authority of Singapore, Otoritas Jasa Keuangan, and Bangko Sentral ng Pilipinas—have strengthened oversight requirements for third-party partnerships, demanding comprehensive due diligence frameworks, continuous monitoring protocols, and enhanced anti-money laundering program oversight.

The Unified Platform Advantage

Meeting the Moment of Change

Banking leadership clearly recognises these challenges, with 89% of executives prioritising security and fraud prevention investments over the next year—far outpacing other technology initiatives like enterprise AI enablement (33%). This focus reflects stark realities: according to KMPG, three-quarters of banking executives report increased cybersecurity attacks over the past year, prompting 89% to expand their cybersecurity budgets.

Forward-thinking organisations are responding with a fundamentally different approach: consolidation through unified platforms that eliminate fragmentation entirely.

The Power of “One Call” Architecture

Instead of managing multiple API endpoints, data formats, and response schemas, imagine initiating comprehensive verification through a single, elegant API call. This isn’t futuristic thinking—it’s the standard that leading organisations now demand.

AdvanGuard is that one platform

A full-stack, AI-powered shield for trust, compliance, and fraud defence. AdvanGuard unites identity verification, AML, KYB, KYT, non-document checks, travel rule compliance, fraud prevention, and risk intelligence into one seamless, AI-driven flow. Instead of juggling multiple vendors, firms get one fully integrated solution — faster verification for legitimate users, real-time fraud detection, and compliance with the toughest global regulations.

AdvanGuard Identity Verification streamlines the entire identity verification process into one unified, AI-driven flow. Each layer – document, biometric, and risk is intelligently connected to verify not just the claimed identity, but the real person behind it.

Transformative Business Benefits

This “one call” architecture delivers immediate and transformative advantages. Rather than managing multiple API endpoints, data formats, and response schemas, organisations can access comprehensive verification capabilities through a single integration point. Where traditional processes might require 48-72 hours for complete verification across all touchpoints, unified platforms deliver comprehensive results in minutes or even seconds. Every capability within Advanguard is built to work together, fully integrated and optimised to deliver instant verification, faster approvals for legitimate users, and fraud prevention measured in milliseconds—all while meeting the most stringent global regulatory requirements.

From a business perspective, the case for change grows stronger when you look at the total cost of ownership. Compliance has become one of the largest hidden costs, with banking leaders now devoting more than 40% of their time to regulatory demands—up sharply from 24% for C-Suite and 27% for boards in 2016. The result is less time for strategy, risk management, and other essential leadership functions. Beyond the obvious reduction in vendor management overhead, unified platforms eliminate the need for complex data mapping between systems, reduce the likelihood of verification conflicts, and provide a single source of truth for compliance reporting.

This architectural approach eliminates the operational gaps that create vulnerabilities in traditional multi-vendor approaches, giving organisations total visibility into their customer base with no blind spots and no guesswork—just complete confidence in their risk decisions. These operational efficiencies translate directly into improved bottom-line performance and enhanced competitive positioning.

Strategic Implementation Considerations

Addressing Key Implementation Drivers

Successfully transitioning to a unified eKYC platform requires careful consideration of both technical and business requirements. Banking executives understand this imperative, with 83% identifying regulatory compliance requirements and 80% citing operational efficiency improvements as the primary drivers behind modernizing their payment platforms and verification systems. Organisations must evaluate their current verification workflows, identify integration dependencies, and develop migration strategies that minimize disruption to existing customer experiences.

Phased Deployment Strategy

The most successful implementations follow a structured approach:

  • Phase 1: Begin with new customer onboarding to realise immediate benefits
  • Phase 2: Gradually migrate existing customer monitoring processes
  • Phase 3: Integrate ongoing compliance and risk management workflows

This methodology allows organisations to build confidence in platform capabilities while ensuring smooth operational transitions and minimal disruption to existing customer experiences.

Change Management Considerations

Success requires more than technical implementation. Teams accustomed to managing multiple vendor relationships need training and support to maximise platform capabilities. The transition from reactive, fragmented compliance to proactive, intelligent risk management demands both technical adaptation and cultural change across the organisation.

The Competitive Imperative

Rising Stakes in Regulatory Compliance

The enforcement landscape has intensified dramatically, with anti-money laundering penalties reaching $3.3 billion across eight major cases in 2024—a staggering increase from the single $186 million fine recorded in 2023. This escalation in both frequency and severity reflects mounting regulatory pressure worldwide.

Market Growth and Opportunity

The artificial intelligence market for anti-money laundering compliance solutions is projected to reach $13.54 billion by 2034, demonstrating industry recognition that automated, intelligent solutions aren’t optional—they’re essential for survival and competitive advantage.

Organisations that can onboard customers faster, more securely, and with greater confidence will inevitably capture market share from competitors still struggling with legacy approaches.

From Compliance Burden to Competitive Advantage

The question isn’t whether to modernise customer onboarding processes, but how quickly organisations can implement solutions that deliver exceptional user experiences alongside comprehensive risk management.

Unified platforms like ADVANCE.AI’s Advanguard provide the technological foundation necessary to stay ahead of evolving threats, eliminate operational gaps, and build the lasting trust that defines successful digital relationships.

The future belongs to organisations that view verification not as a compliance burden, but as a competitive advantage. Those who make this transition will find themselves not just protecting their business, but positioning it for sustainable growth in an increasingly digital world.

Ready to transform your onboarding process? Contact our team today to discover how Advanguard can position your organisation for sustained competitive advantage in the digital economy.

Zhang Yi is Head of Product for eKYC and Identity Solutions at ADVANCE.AI, where he leads the development of AI-powered digital identity and compliance platforms. With 7 years of experience in Regtech domain, he has partnered with banks, fintechs and regulators etc. to deliver solutions that streamline onboarding and strengthen AML/KYC compliance.

At ADVANCE.AI, he drives product innovation for AdvanGuard, the unified platform for identity verification, AML, and fraud defence across global markets. His expertise spans identity proofing, AML compliance and risk management , and he is passionate about adopting LLM based AI to resolve real life problems.

Fragmented KYC: Why It’s Costing Businesses More Than They Realise

In almost every conversation I’ve had with banks and fintechs over the past year, the same frustration surfaces: fragmented KYC onboarding journeys. One compliance head described their process as “a patchwork of disconected KYC APIs,” while another admitted they were losing up to 25% of customers during digital onboarding because customers had to re-upload documents across different systems. This isn’t an isolated issue—since 2016, employee hours spent on AML / KYC compliance have surged by over 60%, and IT budgets allocated to compliance functions have grown roughly 40%, reflecting how much effort and cost these fragmented systems demand.

What started as a “good enough” approach to digital transformation has become a competitive liability. The assumption that combining “best-of-breed” point solutions would produce optimal outcomes has proven not just wrong, but dangerously expensive.

Why fragmented KYC is no longer sustainable

When I first started working with clients on digital onboarding, the “multi-vendor” approach was in fact the norm. You picked the best point solutions — one for ID verification, another for AML, another for biometrics — and stitched them together. But now, there are cracks in this model that are impossible to ignore.

Integration Debt Compounds Exponentially

Each additional vendor doesn’t just add linear complexity—it creates exponential technical integration debt in KYC systems. I’ve worked with firms spending 6-8 months integrating up to  four vendors, only to discover that their mobile app now requires 3 different SDKs just for identity verification. The result? Customer complaints about app storage space, slower load times, and ultimately, onboarding abandonment before completion.

The 25% Abandonment Reality Gets Worse

Industry observations consistently show that legitimate customers—not identity fraudsters—are the ones dropping off mid-process. When I dig into the data with clients, we find that customer abandonment rates during onboarding can reach up to 40% when processes involve multiple document uploads and system handoffs. You’re not just losing bad actors; you’re also losing your target market.

Revenue Impact Beyond Customer Acquisition

Consider this: if you’re spending $200 per customer acquisition and losing 25% to onboarding friction, you’re effectively paying $267 for every successful conversion. Scale that across thousands of monthly applications, and fragmented KYC isn’t just an operational issue—it’s destroying unit economics.

What’s driving the shift toward unified onboarding?

The shift toward unified onboarding isn’t evolutionary—it’s being forced by converging pressures that make fragmented systems untenable:

Fraud has Industrialised

The Financial Action Task Force (FATF) 2023-2024 annual report highlights the increasing sophistication of financial crimes, with fraudsters exploiting gaps between verification systems. When your ID verification provider passes a synthetic identity that your AML system flags, but there’s no real-time correlation between the two, you’re essentially running compliance theater.

The Regulatory Reality Check

Global KYC/AML regulators, including Singapore’s MAS, have intensified their focus on compliance oversight and audit trail requirements. Regulators aren’t just asking for compliance—they’re demanding demonstrable, auditable workflows. When regulatory bodies audit your processes and you have to reconcile data from five different systems, you’re already in trouble.

The Customer Expectation Gap

Global adoption of seamless digital identity verification demonstrates clear customer preference for streamlined processes. In Singapore, Singpass has achieved 97% adoption among eligible citizens. Meanwhile, Estonia has taken its entire suite of government services online, with nearly 8 in 10 citizens saying these digital services make life more convenient.

In key Asian markets, momentum is accelerating rapidly: the Philippines achieved 90 million registrations (97.8% of its 2024 target) for its National ID system as of September 2024, with Asia United Bank reporting 94,000 users onboarded through National ID authentication since launch. Indonesia shows a similar trajectory with 18 million citizens switching to its digital identity app (IKD) as of December 2024, while the country’s e-KYC adoption rate for new banking accounts grew from 20% to over 60% between 2018 and 2022. When your process requires document re-uploads across multiple systems, you’re not just slower—you’re moving against the tide of digital transformation that customers increasingly expect.

Technical Debt Reaches Critical Mass

Every integration point is a potential failure point. Even small cracks compound at scale: one leading BNPL firm in Asia with over US$2 billion in annual GMV estimated that a 1% drop in onboarding conversion could translate into tens of millions in indirect GMV loss annually. That’s because every user who fails to complete onboarding is one less customer generating downstream transactions. At scale, this leakage compounds — not only in lost revenue potential, but also in weakened growth momentum and merchant confidence. In fact, more than 60% of banking customers in Asia-Pacific expect digital services to be available 24/7, making every failed sign-up a measurable dent in future earnings.

 

What Firms Stand to Gain

The shift to unified onboarding platforms offers more than just compliance relief—it unlocks tangible operational, strategic, and financial advantages. By consolidating fragmented systems, firms can streamline workflows, enhance intelligence, and create predictable, scalable processes that deliver measurable ROI across the organization.

Operational Efficiency at Scale

Financial institutions manage complex vendor ecosystems, with some working with over 1,000 third-party vendors or managing more than 10,000 vendor relationships. For KYC specifically, this fragmentation creates a “complexity tax” where firms spend disproportionate resources on coordination rather than core objectives. Unified platforms eliminate this overhead, allowing compliance teams to focus on risk assessment rather than vendor management. The reduction in operational overhead—from contract negotiations to security assessments—often justifies the transition cost within the first year.

Enhanced Risk Intelligence

When verification components operate within a single platform, they create data relationships impossible with fragmented solutions. Document analysis can immediately inform behavioral scoring, device fingerprinting can adjust AML sensitivity in real-time, and biometric validation can correlate with geographic risk indicators. This integrated intelligence dramatically improves both fraud detection and legitimate customer experience.

Regulatory Resilience

Complete audit trails become strategic assets rather than compliance burdens. Unified platforms enable real-time demonstration of decision provenance, making regulatory examinations smoother and building trust with supervisory authorities. This translates to faster approval processes for new markets and products.

Economic Predictability

Beyond vendor consolidation, unified platforms offer economic advantages including single security assessments, streamlined legal agreements, consolidated SLA management, and predictable pricing that scales with business growth rather than integration complexity.

Why We Built AdvanGuard

This is why we built AdvanGuard at ADVANCE.AI. It wasn’t about adding “yet another tool” — it was about replacing a fragmented model with a pre-orchestrated, compliance-ready framework designed for speed, scale, and security. Clients told us they were tired of jigsaw puzzle onboarding. AdvanGuard is our answer to that frustration.

AdvanGuard is that one platform

A full-stack, AI-powered shield for trust, compliance, and fraud defence. AdvanGuard unites identity verification, AML, KYB, KYT, non-document checks, travel rule compliance, fraud prevention, and risk intelligence into one seamless, AI-driven flow. Instead of juggling multiple vendors, firms get one fully integrated solution — faster verification for legitimate users, real-time fraud detection, and compliance with the toughest global regulations.

One call is all it takes. Every capability is already built to work beautifully together, fully integrated and optimised to deliver instant verification, faster approvals for legitimate users, and fraud prevention in milliseconds, all while meeting the toughest global regulations.

AdvanGuard Identity Verification streamlines the entire identity verification process into one unified, AI-driven flow. Each layer – document, biometric, and risk is intelligently connected to verify not just the claimed identity, but the real person behind it.

AdvanGuard's Measurable Impact

Our clients experience tangible improvements:
  • Speed: One API instead of five, cutting integration timelines by as much as 70%
  • Cost optimisation: Elimination of overlapping solution costs and integration overhead
  • Global scalability: Seamless coverage across 200+ jurisdictions without patchworking providers
  • Advanced fraud resilience: Real-time correlation enabling detection of sophisticated attacks like deepfakes and device spoofing

The Cost of Standing Still

When I reflect on all the conversations I’ve had with clients, one lesson stands out: fragmented KYC is not a technology decision, it’s a business one. Stick with patchwork systems, and you’ll pay the price in higher costs, lost customers, and regulatory risk.
Unified onboarding platforms such as AdvanGuard are already showing what the future looks like: faster sign-ups, lower costs, stronger compliance, and a frictionless onboarding experience that builds digital trust from day one.

My advice to product leaders: Don’t wait until regulators — or competitors — force the change.

In my view, the real uncomfortable question isn’t “Can we afford to switch?” but “Can we afford not to?”

Established in 2014, Indodax is one of Indonesia’s leading cryptocurrency exchanges, with more than 8.9 million registered members and a growing library of more than 400 tradable crypto assets. As the first local crypto marketplace to earn ISO 9001, 27001, and 27017 certifications, Indodax has built its reputation on operational excellence and data security. What began as a small community of crypto enthusiasts has evolved into a national platform committed to more than just trading—it is focused on empowering Indonesians with knowledge, access, and protection in the fast-evolving world of digital finance.

This mission is reflected in everything Indodax builds: a mobile-first experience for everyday users, Indodax Academy for crypto literacy, and a robust security framework to ensure that trust remains the foundation of every transaction. And as the digital economy accelerates across Indonesia—now expected to contribute 14% of GDP by 2027—the stakes are getting higher. For Indodax, building a scalable, trustworthy platform has become more than a goal—it’s a responsibility.

The new reality of crypto fraud

As more Indonesians entered the crypto space, Indodax began noticing a shift in user expectations. Today’s users are not only more informed and cautious, but also increasingly security-conscious—demanding platforms that can safeguard their assets and personal data. However, this rise in awareness has been met with an equally sharp rise in threats.

Crypto-related fraud has evolved into a sophisticated, industrial-scale operation—featuring everything from AI-generated deepfakes to organized impersonation scams. Inexperienced users are especially vulnerable, often falling prey to identity theft or unknowingly becoming participants in money laundering schemes.

For exchanges relying on outdated eKYC processes, these developments introduce significant risks—ranging from operational strain to regulatory exposure and user attrition. Indodax experienced many of these growing pains firsthand:

  • Manual Bottlenecks & Inconsistency: Reliance on human checks led to slow response times, inconsistent decisions, and increased risk of error.
  • High Operational Overhead: Market surges required rapid scaling of the verification team, driving up manpower costs and straining internal resources.
  • Fragmented & Inefficient Workflows: Verification tasks were spread across unintegrated systems, making it difficult to track cases end-to-end and increasing the likelihood of human error.
  • Limited Scalability & Availability: Manual processes couldn’t support 24/7 verification, frustrating users with long onboarding times and poor first impressions.

Tangible impact on users and operations

To overcome the inefficiencies of its previous system, Indodax partnered with ADVANCE.AI to implement a unified verification stack that combines biometric liveness detection, document authentication, and AML watchlist screening into a single streamlined workflow. Previously, the team had to switch between multiple platforms to validate user submissions, compare data, and flag inconsistencies—often relying on manual SOPs. With ADVANCE.AI’s integrated solution, these tasks are now automated, reducing friction, minimizing human error, and significantly improving operational efficiency.

The impact has been both immediate and significant. Indodax has fortified its defenses against sophisticated threats such as:

    • Deepfake-enabled spoofing and identity theft.
    • Synthetic identity fraud used in laundering and pump-and-dump schemes.
    • Mass account farming by bot networks.

“New users onboard faster, with fewer delays or requests for support, helping to create a stronger first impression and higher conversion at the registration stage.” shared Sutanto.

Since the rollout of the new system, Indodax has seen a clear reduction in onboarding-related support tickets and manual KYC escalations. This has improved internal team efficiency and reduced the need to scale operations during peak periods.

Future-proofing trust in Indonesia’s crypto ecosystem

As Indonesia’s crypto economy grows, platforms like Indodax must constantly evolve to stay ahead of increasingly complex threats. With ADVANCE.AI as a strategic verification partner, Indodax is now better equipped to deliver seamless, secure onboarding—at scale.

Looking to level up your digital onboarding?

Explore how ADVANCE.AI’s identity verification suite can help your business onboard faster, detect fraud smarter, and protect your users—without the trade-offs. Contact us today or book a complimentary consultation session.

Founded in 2006 as a specialist arm of PT Henan Putihrai Sekuritas, PT Henan Putihrai Asset Management (Henan Asset) has grown into one of Indonesia’s most trusted and forward-thinking asset management company in Indonesia’s capital market.

Based in Central Jakarta and fully licensed by Otoritas Jasa Keuangan (OJK), Henan Asset is committed to staying ahead of the curve to consistently deliver alpha across market cycles with diversified suite of mutual funds—including equities, bonds, money market, and protected funds—serving both retail and institutional clients.

Licensed and regulated by OJK, Henan Asset has earned prestigious recognitions for its performance and innovation—including consecutive LSEG Lipper Fund Awards and accolades from CNBC, Bloomberg, Kontan, Bareksa, Warta Ekonomi, and Infovesta—testaments to their relentless pursuit of excellence in investment management.

Its flagship platform, MyHero app, reflects Henan Asset’s commitment to redefining the investing experience—making it more accessible, purposeful, and empowering for all Indonesians. More than just a mutual fund platform, MyHero bridges the gap between complex investment strategies and everyday financial goals—helping first-time investors take confident first steps, while equipping retail and institutional clients with the tools to grow smarter.

The hidden cost of imperfect data

As a data-driven investment company, Henan Asset places a strong emphasis on accuracy, speed, and efficiency. Poorly implemented onboarding processes can have extreme detrimental impacts on businesses in the fintech industry. Gartner reports that poor data quality — inconsistent, outdated, or incorrect — costs companies an average of US $15 million annually, or 15–25% of revenue.

Rising compliance stakes: embracing data privacy and customer confidence

With Indonesia’s tightening personal data protection laws, businesses are encountering escalating regulatory pressures. Organisations are now expected to implement transparent data handling, lawful processing, data minimisation, and stringent security controls. While non-compliance can carry significant penalties, the real benefit lies in fostering user trust, operational resilience, and alignment with evolving government-led privacy initiatives. Henan Asset viewed these changes not just as regulatory requirements, but as an opportunity to reinforce its customer-first ethos.

As Ridho explains…

“Compliance was non‑negotiable, but our manual processes were compromising a smooth customer experience. Our users’ time and trust matter, so we needed a solution that ensures compliance happens seamlessly in the background—without ever burdening our customers.”

In essence, Henan Asset faced a two-fold challenge: ramping up onboarding capacity while meeting robust privacy obligations. Operating manually under these conditions meant slower responses, higher risk of errors, and increased compliance overhead—propelling them to seek a smarter, more sustainable technological approach.

Discovery and decision: finding the right partner

Henan Asset heard positive buzz in fintech circles about ADVANCE.AI’s integrated digital identity verification and AML screening. In conversations at regional meetups and a peer recommendation, they identified that ADVANCE.AI offered the full package—robust APIs, strong regional presence, and a unified solution that their competitors didn’t. As Ridho explains, they needed a partner who understood Southeast Asia’s regulatory landscape—something ADVANCE.AI, with nearly a decade of regional experience, was well equipped to do.

Ridho Gani Head of IT System Engineering Henan Asset

The ADVANCE.AI team was extremely responsive and proactive during UAT when helping us integrate modules. We reduced onboarding time by 90%, drop-offs by 80%, whilst maintaining 99.99% AML screening accuracy—all while scaling from 5–7 to 40–50 users per day. It’s truly remarkable.

Ridho Gani, Head of IT System Engineering, Henan Asset

 

During implementation, Henan Asset and ADVANCE.AI collaborated closely to embed the ID Document OCR, tailored bank-account verification, and real-time AML screening processes directly into MyHero. A standout was ADVANCE.AI’s ID Document OCR, which uses Southeast-Asia–trained AI models to accurately extract data from passports, driver’s licenses, and national IDs in over 200 countries.

Built for resilience, the system handles rotated images, poor lighting, and complex backgrounds—all while maintaining around 97% accuracy. Henan Asset has since onboarded more than 12,000 users, enjoying fast, reliable, and compliant onboarding.

Looking ahead: scaling securely

This collaboration didn’t just solve pain points; it redefined how Henan Asset scales trust in Indonesia’s volatile digital investment landscape. With onboarding now effortless and compliant, Henan Asset has its sights set on further global B2B expansion. ADVANCE.AI’s platform provides the infrastructure to scale into institutional partnerships—while maintaining speed, audit readiness, and user trust.

“ADVANCE.AI doesn’t just sell technology—we share the belief that compliance should actually enable growth, not hold it back,” says Zhang Yi, Head of Product at ADVANCE.AI.

Our goal is to take the friction out of the process so companies can scale quickly on the front-end, while remaining absolutely bulletproof behind the scenes.

Zhang Yi, Head of Product, ADVANCE.AI

 

Ready to transform compliance into your competitive advantage? Contact us today or book a complimentary consultation session to discover how 90% faster onboarding can unlock your growth potential.

In June 2023, an audio clip was posted on X of President Joko Widodo, the President of Indonesia, singing ‘Asmalibrasi’, a popular Indonesian pop song by Soegi Borneon. Even though the President was a known fan of music, especially heavy metal music, the clip still surprised the public and drew over 5 million views on X and 188,000 likes on TikTok.

As it turned out, the clip was the work of an artificial intelligence (AI) that mimicked his voice. While it was created for entertainment, it stoked fears that AI-generated content (AIGC) could be used for spreading misinformation and even scams.

Indeed, driven by a burgeoning digital economy and a large online population, the number of deepfakes, a form of AIGC, has increased by 1,530% across the Asia Pacific between 2022 and 2023.

As the biggest economy in Southeast Asia, financial fraud remains a clear and present concern in Indonesia. According to a FICO study, 64% of Indonesians have experienced scam attempts, and 36% are afraid of identity theft. Otoritas Jasa Keuangan, the Financial Services Authority in Indonesia, noted that incidents of financial fraud in Indonesia have risen by 25% in 2023 alone. While the country has, at least for the time being, avoided high-profile AI- and deepfake-assisted financial scams, it is merely a matter of time.

Businesses have a key role to play in assuaging these well-found concerns. In this article by Anggraini Rahayu, Director of Strategic Accounts at ADVANCE.AI Indonesia, we explore the opportunities and pitfalls of AIGC, the government’s response to said threat, and how, by taking a multi-layered approach to identity verification and authentication, businesses can beat back the tide of AIGC-related fraud.

 

Anggraini (Anggi) Rahayu is the Director of Strategic Accounts in ADVANCE.AI Indonesia.

Ibu Anggi brings three decades of extensive leadership experience across AI, machine learning, analytics, financial services, IT, and retail industries. Prior to joining ADVANCE.AI, Ibu Anggi held senior management positions at PT SAS Institute, Diebold Nixdorf, and IBM Indonesia. 

Navigating the Double-Edged Sword of AI

AIGC is already the next big thing in the world of technology. In the banking and financial services industry alone, AI is used for everything from fraud detection to generating personalised, real-time responses to customer inquiries. AI systems can even analyse customer data to provide tailored financial advice.

Unfortunately, though unsurprisingly, such opportunities have piqued the interest of fraudsters. Today, these fraudsters are crafting AIGC to create convincing digital impersonations of real individuals, thus allowing them to circumvent identity verification protocols. The vulnerable areas include opening digital bank accounts, loan and credit card applications, and e-commerce transactions. Such breaches pose considerable financial and reputational risks to individuals and organisations alike.

Bridging the Gap in Indonesia

The public sector plays a critical role in AI development and safety. Governments can help set regulatory standards, foster ethical guidelines, and ensure equitable access to technology benefits across society.

For Indonesia, its 2020-2045 National Artificial Intelligence Strategy is a national framework to streamline Indonesia’s existing technology-focused plans and projects, including AI. The framework shows promise in many aspects. For example, it outlines clear priorities for structured and focused AI development, as well as a need for a data ethics board and national standards for safer, more ethical AI development. These are strong, confident steps in the right direction.

However, gaps persist in the scheme. For instance, details about comprehensive regulations that address all facets of AI development, such as data privacy, intellectual property, and cross-border data flows, are lacking. Also, while the framework does mention the use of AI to bridge the digital divide, there is far less emphasis on educating the public on AI and AIGC-related risks.

Business Stepping Up to the Challenge

Yet, all of this takes time, and while the Government of Indonesia plots its next steps, the private sector must step up as well.

To that end, whilst many companies have implemented electronic Know-Your-Customer (eKYC) measures to digitally authenticate customers, fraudsters have refined their methods too. For instance, they might utilise both physical and digital items, such as photographs, highly detailed masks, digitally generated images, or videos, to trick the camera of a smartphone or laptop. There are even entire websites like OnlyFake that allow users to generate fake ID documents, such as passports and driver’s licences.

Fortunately, there is an arsenal of ready-to-deploy tools to keep fraudsters at bay, especially on the digital onboarding front. In fact, businesses must take a multi-layered approach when it comes to identity verification and authentication.

Tool #1: Forgery Detection

The first countermeasure is forgery detection. While facial recognition technology has come a long way, it still cannot independently verify the authenticity of an identification card. A solution, then, is to combine it with forgery detection to significantly enhance identity verification processes.

For instance, ID forgery detection solutions use machine learning models to identify common types of forged or altered ID documents, which not only facilitates remote completion of the eKYC process but also strengthens the security posture of the entire organisation.

Tool #2: Liveness Detection

Liveness detection can also counteract the rise of AIGC fraud. By integrating facial recognition with liveness detection, we can ensure that the individual logging into the account is a live person as opposed to a 2D printout, video, or AI-generated face.

Tool #3: Real-time Monitoring System

Finally, continuous monitoring and anomaly detection, too, are key. Deploy robust real-time monitoring systems that identify suspicious bot or human-driven interactions, and spikes and flag potential attacks.

Every Contribution Counts

The Pandora’s Box that used to contain AI is now open. Yesterday, it was a fun, relatively harmless video of a singing President. In May 2024, a Hong Kong-based staff from Arup, a multinational design and engineering firm, fell prey to a deepfake scam and transferred US$25 million to the perpetrators—what’s next for AIGC-assisted threats? What will tomorrow bring?

Even as fraudsters attempt to harness the power of AI for nefarious purposes, the public and private sectors must work together, learn, and adapt to the ever-evolving threat landscape. By embracing deeper and more meaningful collaborations, we can harness the best of both worlds: the private sector’s rapid technological innovations and the public sector’s commitment to safety and ethics.

Ultimately, everybody has a stake, and every contribution counts. Together, we are not just reacting to threats. Instead, we can proactively build a safer, smarter, more resilient business landscape for all.

Speak to our experts today to understand how enhance your digital onboarding solutions and let us help you mitigate the risks in your business, and grow in a scalable and secure manner.

ADVANCE.AI, as part of the Advance Intelligence Group, has been named as a Representative Vendor for DIV Platform in the 2023 Market Guide for Identity Verification report by Gartner, the world-renowned research and advisory firm. This comprehensive guide offers an in-depth analysis of the identity verification market, pinpointing prevailing trends and detailing the key players who are shaping the industry.

Substantial growth and evolution in identity verification market

The identity verification market has witnessed substantial growth and evolution, propelled by the ever-growing demand for secure and seamless digital interactions across various sectors, including banking, financial services, and fintech. Businesses are turning to solutions like ours not only to fortify their defences against fraud, but also to comply with regulatory requirements, and to enhance customer experience. Thus, the role of identity verification technology has become highly crucial today.

 

Delving into this market, according to the 2023 Gartner Market Guide for Identity Verification report:

  • “Buyers’ needs are evolving beyond traditional know your customer (KYC) use cases. Identity verification is now being deployed more broadly in marketplace, workforce and security-focused use cases, which is increasing demand for identity verification solutions.

  • The market is entering a transition period as portable digital identity solutions are starting to mature, which in the next five years will reduce the demand for identity verification solutions.

  • Competition in the market is fierce, with a large number of vendors offering what appear to be similar core identity verification processes. This is causing confusion among buyers, and forcing vendors to offer additional features such as enhanced fraud detection and low-code integrations in order to differentiate.

  • Concern is growing among organisations about whether AI-enabled attacks using deepfakes will undermine the integrity of the identity verification process or in a worst case scenario, render it worthless.”

Our commitment to the industry

We believe that ADVANCE.AI’s inclusion in this guide reflects our steadfast commitment to delivering cutting-edge identity verification solutions that cater to the dynamic market demands. While staying vigilant to the latest industry trends, we strive to conquer common technological challenges and transcend traditional applications. It is believed that deploying a strong and robust eKYC journey is critical in helping businesses manage risk throughout the customer lifecycle. Our eKYC services leverage advanced technologies to provide secure, accurate, and user-friendly identity verification capabilities, offering comprehensive services to achieve our clients’ business goals.

At the core of our solution lies a comprehensive suite of document check and biometric check capabilities, including:

Document check

  • Image Quality Assessment (IQA): Our solutions will guide the user to upload high-quality images and detect the image quality of a photo shoot in real-time, to ensure the effectiveness and accuracy of document recognition ability.

  • Optical Character Recognition (OCR): Our ID document OCR extracts details such as name, gender, age and issue date and verify them accordingly.

  • ID Forgery: ID Forgery Detection is a server-side API that can detect the fake card, such as, retake, black and white photocopy, edited face etc, ensure the authenticity of identity documents, safeguard business security and reduce manual audit costs.

Biometric Check

  • Liveness Detection: Our biometric liveness detection checks the physical presence of users by real-time corrections of videos, photos and distance, and identification of natural face movements. Additionally, it prevents impersonation, including displayed videos and photos, 3D masks, paper masks, and inkjets.

  • Face & ID comparison: Facial Image collected during Liveness Detection is compared with the one from governmental ID card to check whether the user is both a living person and the same person.

  • Database Face Search: ADVANCE Face Search searches the face database for similar faces and returns the similarities given a face photo. It helps detect identity fraud risks via facial information in real time, as a compensation to the absence of a national ID standard. Through highly accurate face recognition technology, it effectively identifies ID fraud risks in transactions and helps avoid further fraud actions.

As the digital landscape continues to evolve, identity verification is undergoing a transformative phase, moving towards more advanced and mature solutions. Speak to our experts today to understand how advance digital identity verification solutions can help your business mitigate risks, and grow in a scalable and secure manner.

Reference

Gartner, Market Guide for Identity Verification, By Akif Khan, Robertson Pimentel, Sean ONeill, Swati Rakheja, Published 7 September 2023.

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of the Gartner research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Skyro is a rapidly growing fintech company in the Philippines, offering digital consumer lending products. Committed to empowering more Filipinos by providing a range of digital consumer finance products such as product loans, cash loans and other lending products designed to meet the diverse financial needs of Filipino consumers, Skyro’s mobile app offers a streamlined process, interactive map and diverse payment options, providing customers with flexibility and convenience. And it has indeed proven to be the right strategy.

Skyro’s Journey since 2022

In just under two years since its 2022 launch, Skyro has achieved significant milestones and business performance in the fintech industry. In 2023, Skyro achieved an average compound monthly growth rate of 50 percent. Skyro’s mobile app had an increase in its number of new and active users by 82.5 percent, leading to a proportional rise in total app downloads and usage. The brand has expanded to over 2,500 partner merchant locations and nearly 200,000 customers.

To ensure Skyro remains the leader in convenient and accessible financial solutions, prioritising cutting-edge technologies is paramount. By constantly innovating and optimising their mobile app, Skyro can streamline processes further, personalise user journeys, and offer superior customer support – all of which are crucial for retaining their rapidly growing user base and attracting new customers in the competitive Philippine fintech landscape.

A Crucial Launch Requirement: Secure Digital Onboarding

Friction in customer onboarding is a major hurdle for fintech startups in the Philippines. A 2021 study by FICO reveals that three in five Filipino consumers will abandon long online banking account applications, and one in five Filipinos will drop out if asked more than five questions during onboarding. As Skyro prepared for an August 2022 launch, the team predicted it would face similar challenges in acquiring new digital lending customers.

Implementing a secure yet frictionless onboarding journey was therefore critical. Skyro needed to meet stringent regulatory requirements around eKYC (electronic Know Your Customer) processes, while also ensuring a smooth, mobile-friendly experience. Striking this balance was key to driving adoption of their digital lending products.

“We explored taking the in-house route but quickly realized we needed an integrated solution from a specialized provider,” Sergey said.

Skyro’s requirements included solutions for liveness detection to prevent spoofing attempts, facial comparison to matched customers against their ID photos, optical character recognition (OCR) to extract data from identity documents, and ID forgery detection to mitigate fraud risk. As building these capabilities in-house was not feasible for the young fintech startup, the management initiated a multi-month evaluation of potential vendor partners and manual verification methods.

“The timelines and technical complexity involved made partnering with an expert the best path for our launch,” shared Pavel Schamberger, Head of Data at Skyro.

Evaluating the Right Solution

 In 2021, Skyro decided to partner with ADVANCE.AI for its integrated eKYC and digital onboarding solution. ADVANCE.AI’s solution stood out for its proven 99.9% accuracy across capabilities like liveness detection, facial comparison, OCR, and ID forgery detection, surpassing the results achieved through manual checks and providing Skyro with the confidence they needed to launch their mobile lending platform.

 

Skyro partnered with ADVANCE.AI to integrate their eKYC and digital onboarding technologies from the ground up.

From the start of their partnership, ADVANCE.AI has provided Skyro with the right eKYC solutions, helping them with:

Seamless Integration: ADVANCE.AI’s technology seamlessly integrated with Skyro’s existing systems, ensuring a smooth user experience.

Faster Onboarding: Streamlined verification processes led to quicker customer onboarding times.

Enhanced Security: ID forgery detection features minimised fraud risks, fostering trust with Skyro’s customers.

During its hypergrowth period, Skyro was onboarding up to 5,000 new customers daily, and having a reliable solution has proven to be vital to sustain its growth while remaining lean as an organisation. Beyond being able to scale efficiently, Skyro also trusted compliance standards of ADVANCE.AI solutions to meet local onboarding and compliance regulations, without compromising on customer experience.

“The ADVANCE.AI team’s support has been very fast, without any problems at all. Our internal team constantly comments that it’s a great IT product,” Pavel added.

 

Skyro’s implementation experience with ADVANCE.AI’s technologies was smooth, with an intuitive integration process backed by comprehensive documentation and highly responsive support.

A Shared Vision for a Secure Financial Ecosystem

Both Skyro and ADVANCE.AI are committed to building a secure financial ecosystem in the Philippines. Skyro emphasises the importance of collaboration to combat fraud and establish trust in the digital finance landscape.

After a standout 2023 performance with 50% month-over-month growth, Skyro plans to triple its customer base in 2024 through continued expansion and new product launches. The company is keen to further enhance their onboarding processes by covering other aspects of risk and fraud management as the company continues to grow and expand its customer base.

We want to build credibility as a young brand by collaborating with partners like ADVANCE.AI for eKYC, risk analysis, and fraud prevention,” Pavel stated. “We’re very confident and hopeful for collaborative partnership with ADVANCE.AI as we continue to grow and deliver best-in-class solutions for our customers.

ADVANCE.AI

In ADVANCE.AI, we’re committed to working closely with our customers to deliver the best-in-class AI-powered solutions suited for your digital onboarding, risk management and fraud management needs. Speak to our team of experts today, to get your peace of mind as you innovate your tech stack to better serve your digital customers!

Teng Sherng (TS) Lim is the Chief Commercial Officer at ADVANCE.AI. He has over 30 years of experience in IT Technology and Services. Working with customers and leading teams across various geographies and functions, TS helps businesses in Asia Pacific and beyond address challenges in Cybersecurity, Financial Crime & Compliance, Fraud & Identity, Enterprise Applications and other business and technological areas.

TS Lim - CCO - 2024

As the first quarter of the year draws to a close, I’m keenly prompted by a moment of reflection on the rapid passage of time. With teams re-energized and plans gaining traction, end of quarter is often an opportune juncture to contemplate the strategies that will define success for the next few seasons of execution. This time, I am reflecting on the evolution of innovation in our industry and how some key dynamics will shape the rest of 2024.

Innovations evolve so fast that old ones are phased out even as new ones are introduced. Few industries are at the forefront of such dramatic changes as the Banking, Financial Services and Fintech Industries (I’d categorically use “BFSI” as a generic term to reference these industries in the rest of this article). Indeed, the industry has frequently catalysed progress, helping organisations and people manage economic and societal changes. With 2024 already in the present tense, what are some trends we can expect, and what can BFSI leaders do to capitalise on them? Allow me to share my own perspective of key dynamics to watch in 2024.

The Gap Between Movers and Laggers Will Widen in 2024

The International Monetary Fund predicts that while Asia Pacific will continue to fuel global growth, regional economic slowdowns are likely to dampen overall growth rates. Additionally, Deloitte forecasts that higher interest rates, increased regulatory pressure, and sustained inflation will pose challenges on the banking, financial services and financial technology companies.

These trends will certainly shift financial behaviour among businesses and consumers, influencing the demand for specific banking and financial products. For instance, financial strains may lead to a rise in demand for loans and credit lines, while higher interest rates and stricter regulations could fuel the demand for fintech solutions that assist financial institutions in managing and mitigating risks.

The Widening Gap: Innovators vs. Laggards

During the 2019 to 2022 period, triggered by COVID, many businesses successfully propelled their innovation. Now that we’re completely in a post-COVID phase, this trajectory needs to continue, in order for businesses to stand out against competitors. This is also where the first key dynamic we should watch closely, comes in.

Financial services businesses will face a critical choice in 2024: embrace change and invest in innovation, or risk falling behind in the face of evolving economic realities and customer needs.

There are opportunities to be had even in times of distress. While it is true that the economic outlook isn’t exactly favourable compared to this time last year, the current economic climate forces businesses to leverage diverse sources of data, boost digital capabilities, and build partnerships that will help capitalise on opportunities. Such pre-emptive measures not only spur businesses into action, but they help prepare for the storms ahead too. Conversely, businesses frozen in place due to uncertainty are bound to create self-fulfilling prophecies, which in turn leave them behind when the storms do pass overhead. In short, decisive action, backed by strong data-driven insights, is crucial for success in 2024 and beyond.

Generative AI Will Unleash a Wave of Transformation (But Challenges Remain)

Speaking of digital capabilities, generative Artificial Intelligence (GenAI) dominated much of the conversations in 2023—and for good reasons. While less than one percent of independent software vendors have GenAI embedded in their enterprise applications, the number is set to cross the 80 percent mark by 2026. While the most visible application among BFSI companies is likely going to be in chatbots in the foreseeable future, I would expect that GenAI will be applied in less visible yet equally critical ways.

GenAI in Action: Real-World Examples

GenAI’s impact isn’t a distant future; it’s already making waves:

  • Simplified Onboarding: AI is already streamlining customer onboarding by automatically verifying documents. AI-powered systems efficiently extract details from various documents, including identification cards, passports, and utility bills. This not only expedites the process but also enhances security with features like Multi-Factor Authentication (MFA) that utilise AI for liveness detection, behavioral analysis, and voice biometrics. These layered approaches create a robust system, making it significantly harder for fraudulent identities to slip through.
  • Enhanced Risk Assessment: GenAI can significantly improve risk assessment by generating additional data sets based on various scenarios and market conditions. This allows for faster training of AI/ML models, leading to more accurate and personalized risk assessments. This, in turn, enables institutions to offer more inclusive lending practices while also mitigating default risks.

Further Use Cases of GenAI as a Game-Changer

GenAI offers a transformational potential for the BFSI sector, reaching beyond customer onboarding and risk assessment. Imagine an AI assistant that not only curates personalised investment options but also explains the rationale behind each recommendation, fostering greater financial literacy and engagement. This is just one glimpse into the diverse applications of GenAI:

  • Personalised Financial Planning: GenAI can analyse individual financial data, risk tolerance, and life goals to generate tailored financial plans and investment strategies, empowering individuals to make informed financial decisions.
  • Wealth Management: GenAI can personalise wealth management services by creating custom portfolio recommendations, simulating market scenarios, and providing real-time insights tailored to each client’s unique needs. This level of personalised guidance can potentially improve long-term financial outcomes.
  • Regulatory Compliance Automation: GenAI can streamline the complex and time-consuming process of regulatory compliance automation by automating tasks like report generation, data analysis, and anomaly detection. This frees human resources to focus on higher-level tasks and strategic decision-making, while potentially minimising regulatory compliance errors and associated risks.

Navigating the Challenges

Despite its immense potential, widespread adoption of GenAI faces several challenges:

  • Robust Data Infrastructure: GenAI models require vast amounts of high-quality data to function effectively. Building and maintaining this infrastructure can be a challenge for some institutions, particularly smaller players.
  • Ethical Considerations: Concerns around bias and explainability loom large. GenAI algorithms are only as good as the data they are trained on. Addressing potential biases and ensuring transparency in decision-making processes is crucial to building trust and ensuring ethical use of this technology.
  • Job Displacement Concerns: As certain tasks become automated through GenAI, concerns regarding job displacement in the BFSI sector are emerging. Addressing these concerns through reskilling and upskilling initiatives will be essential to ensure a smooth transition and mitigate potential negative impacts on the workforce.

Given the above and more innovations to come, GenAI promises a future of personalised, efficient, and data-driven solutions in the BFSI landscape. However, navigating the ethical and practical challenges associated with its implementation will be crucial for ensuring responsible and inclusive growth in the years to come.

The AI Arms Race in Fraud Management

The potential of GenAI in the BFSI sector is undeniable, but it’s a double-edged sword. While it offers numerous benefits, it also equips fraudsters with sophisticated tools to create highly convincing deepfakes, manipulate documents, and launch targeted phishing attacks. This necessitates my predicted reality in 2024 – a continuously evolving arms race in the realm of fraud management.

The Sophistication of Fraud

  • Deepfakes and Synthetic Identities: GenAI could create realistic deepfakes of individuals, including forged documents, signatures, and even voice recordings. This can bypass traditional document verification methods during onboarding, potentially allowing fraudulent actors to gain access to financial accounts.
  • Personalised Phishing Attacks: GenAI can personalise phishing emails, messages, and websites, mimicking legitimate communication styles and tailoring them to specific individuals. This makes it increasingly difficult for users to discern genuine communications from fraudulent attempts.

Fighting Fire with Fire: AI-powered Countermeasures

Fortunately, the battle against fraud is not a one-sided war. The BFSI sector is also harnessing the power of AI to develop advanced countermeasures:

  • Deepfake Detection: GenAI algorithms can analyze vast datasets of real and synthetic identities, identifying subtle anomalies in facial expressions, eye movements, voice patterns, and even typing rhythms. These advanced detection methods can expose deepfakes and prevent unauthorised access.
  • Real-time Fraud Prevention: AI-powered systems can analyze transactions in real-time, identifying suspicious patterns and potentially fraudulent activities. This enables immediate intervention and minimises the impact of fraudulent attempts.

Challenges and the Path Forward

Despite the potential of AI-powered countermeasures, challenges hinder their widespread adoption:

  • Legacy Systems and Resistance to Change: Some BFSI companies continue to rely on outdated systems and are hesitant to embrace new technologies like GenAI. This reluctance puts them at a disadvantage in the fight against evolving fraud tactics.
  • Lack of Resources and Expertise: Smaller institutions might lack the resources and expertise needed to develop or implement sophisticated GenAI-based solutions.

Bridging the Gap

For such institutions, collaborating with third-party vendors offering pre-built GenAI-powered fraud detection solutions can be a viable option. Additionally, fostering industry-wide collaboration and knowledge sharing can equip smaller players with the necessary resources to combat sophisticated fraud attempts.

Rounding up this prediction, I expect that the BFSI sector will continuously adapt to the evolving landscape of fraud, as would the fraudsters. By embracing AI-powered countermeasures and fostering collaboration, financial institutions can mitigate the risks associated with GenAI-enabled fraud and safeguard their customers’ financial well-being. However, addressing the challenges of legacy systems, resource constraints, and knowledge gaps will be crucial for ensuring widespread adoption and a secure financial future.

Navigating the AI Policy Maze – Guidelines Over Rules

Governments in the region are on the move regarding AI. For example, the Monetary Authority of Singapore (MAS) completed the first phase of Project MindForge, a risk framework for GenAI in the financial sector. MAS also set up a Cyber Security Advisory Panel to tackle malware scams and AI-related risks in the financial sector.

However, while regulations act as effective guardrails for novel technologies, too much regulation could risk suffocating innovation altogether. To strike a balance between the two, I expect that more guidelines and policies— not rules of law—will be introduced around AI in 2024. I say this because the rules of law around AI are difficult to enforce.

One main challenge to rule-based regulation around AI would be the harmonisation of cross-border enforcement strategies across government agencies from different countries. And the second challenge would be the matter of future-proofing. With AI developing so rapidly, even if the rules of law were somehow agreed upon by all parties involved, they would be obsolete by the time they were implemented.

The case for principle-based approach

Instead of rigid rules, flexible guidelines offer a more adaptable approach, reasons being:

  • Collaborative Development: In-depth consultations with stakeholders from the public and private sectors can foster understanding, encourage responsible development, and address concerns from diverse perspectives.
  • Agility over Rigidity: A principle-based approach focusing on core ethical values and potential risks allows for greater flexibility and the ability to adapt to the dynamic nature of AI. This ensures that regulations remain relevant and effective in a fast-changing environment.

By recognising the complexities of establishing effective AI regulations, businesses can navigate the maze of guidelines and principles that are likely to shape the future of this transformative technology.

The Future Beckons: Navigate the Maze, Shape the Landscape

As we build the path into 2024 and beyond, the BFSI landscape stands at a pivotal juncture. Unprecedented technological potential converges with intricate ethical considerations, creating a dynamic and demanding environment. This calls for immediate action from financial services players to navigate the evolving landscape responsibly and ethically.

Going forward, firms should focus on two primary actions: firstly, invest in AI transparency and security to ensure that technological advancements are both understandable and safe for all stakeholders. This includes the development of explainable AI systems and the fortification of data protection measures. Secondly, fostering proactive collaboration with regulators and industry partners is essential. By engaging in dialogue and partnership, firms can steer the integration of AI technologies in a way that respects ethical boundaries and promotes inclusivity and accountability.

By taking these crucial steps, you can not only navigate the maze of evolving regulations and challenges but also actively shape the future of the BFSI landscape. As a united force, the industry can harness the power of AI responsibly, ensuring sustainable growth that aligns with broader societal values. Remember, the future is not predetermined – it’s waiting to be shaped by your actions today.

The utopia will be one where everyone embraces the challenge, seizes the opportunity, and takes on a leading approach to shaping the responsible and ethical future of the BFSI sector.

About the author
Mohammed Fouladi (Mo) is a strategic tech leader with extensive experience in development and implementation of solutions in the areas of cyber security, identity proofing and fraud prevention. With proven skills in solving complex problems, creative thinking and identifying action plans to ensure a successful conclusion, Mo’s expertise is in product innovation, developing strategies for identity proofing, fraud detection and prevention, assisting customers in technology adoption and new feature development based on emerging customer offerings.

Mo has previously shared on Fraud Trends in the Holiday Season.

Mo heads Customer Value Proposition at ADVANCE.AI and works closely with enterprise clients for on-premise and SaaS business solutions.

Mo heads Customer Value Proposition at ADVANCE.AI and works closely with enterprise clients for on-premise and SaaS business solutions.


In today’s digital landscape, the importance of identity verification cannot be overstated. For businesses, it serves as a critical defence against unauthorised access, fraudulent activities, and dishonest practices that can lead to significant financial losses and reputational damage.

The need for identity verification is particularly crucial in the gig economy, as exemplified by the food delivery business. For example, account sharing, where multiple workers use the same account to make deliveries, may initially seem harmless but has significant implications for both businesses and end-users. Identity verification is fundamental to the sharing and gig economy, providing security, fraud prevention, legal compliance, and enhanced trust.

Imagine an unverified driver delivering food—the business can’t track this unauthorised presence. This raises fundamental questions about accountability, especially in instances involving food safety or personal safety concerns. Who assumes responsibility then? Questions also arise about the original driver’s involvement or possible collusion. Did he sell his details to someone else, or was he a victim of cybercrime?

Identity Verification with Facial Recognition

Financial transactions add another layer of complexity. Who rightfully collects the cash, and how can the platform verify that the original driver is not in cahoots with the additional driver for illicit gains?

To address the pressing issue of account sharing, many businesses across Asia Pacific are turning to facial recognition with multi-layered verification to verify the identities of their users. This proactive approach not only enhances security, but also fosters a sense of trust and reliability in an ever-evolving gig economy.

Multi-layering with facial recognition as part of identity verification

Facial recognition offers an added layer of security. It verifies an individual’s identity by analysing their distinct facial characteristics, such as the distance between eyes, nose shape, and jawline. These details are captured as a template, with stored templates in a database, commonly used for access control, user authentication, and payment authorisation.

While there has been some controversy around the privacy and ethics of using facial recognition, when securely carried out, it offers an added layer of security to identity verification.

So far, facial recognition has proven critical in the healthcare and financial services industries, both noted as being especially vulnerable to identity fraud.

In banks and financial institutions, facial recognition technology is employed during the customer onboarding and identity verification processes to ensure authenticity. The Bank of Thailand has gone a step further to protect its customers using facial recognition technology. In April 2023, it introduced a policy whereby any local or overseas transaction above 50,000 baht (US$1,440) must utilise facial recognition instead of digital tokens as an additional layer of protection.

And within healthcare, we have seen facial recognition technology being used to prevent people from impersonating others to unlawfully obtain medical treatment or prescription drugs.

Beyond healthcare and financial services, we also see widespread adoption of facial recognition technologies in other industries. In 2022, Malaysia’s Kuala Lumpur International Airport began using facial recognition to verify the identities of passengers before they board their flights. In Singapore, over 4 million Singaporeans and Permanent Residents access government services through a new facial verification feature in its national identity program, SingPass, since 2020.

However, facial recognition is by no means a silver bullet. For instance, facial recognition cannot verify the authenticity of an identification card. It also cannot identify fraudsters that create fake accounts that use synthetic identities at scale.

Besides, given enough time, the best defensive measures today will likely be circumvented by the fraudsters of tomorrow. This is especially true considering the rise of Generative Artificial Intelligence (AI), which can produce various types of content, including text, imagery, audio, and synthetic data. Already, deepfakes are being used to create videos and audio recordings of people—simply by taking the victims’ photos or video clips from social media platforms—and fool their relatives and friends into transferring money. Compounding the situation is that, according to one study, facial recognition technologies that employ a specific user-detection method are highly vulnerable to deepfake-based attacks.

The only way to address these shortcomings is to combine facial recognition technology with other identity verification solutions. In fact, having an integrated, multi-layered approach allows businesses to reduce dependency, leverage the strengths of different technologies, and flexibly adapt to the changing threat landscape.

How to deploy a multi-layer approach to identity verification

Document verification

While facial recognition technology is unable to verify the authenticity of an identification card (“ID”), it can be used in conjunction with forgery detection to bolster identity verification processes. For example, ADVANCE.AI ID Forgery Detection uses machine learning models to detect common types of forged or altered ID documents. This process not only allows individuals to complete the Know-Your-Customer (KYC) process remotely through digital channels, they help bolster the security posture of the entire organisation.

Liveness detection

Additionally, facial recognition technology pairs well with liveness detection to potentially overcome the rise of Generative AI-based fraud. ADVANCE.AI recently worked with an Indonesian-based delivery platform to implement a solution that authenticates drivers’ identities—protecting both their customers and its own business. The solution uses a mix of facial recognition and liveness detection, to ensure that the person logging into the account is a live person—and not a 2D print out, video, or AI-generated face—and that they are a match with the registered user.

The growing multitude of tools means that businesses need to truly understand their own needs to build a holistic, multi-layered defence to combat fraud. The key is to find solutions that not only fit your business needs, but they also must work well with one another.

Our team at ADVANCE.AI is continually monitoring and identifying emerging technologies to better safeguard businesses from identity fraud, or other related risks. In our product development, we endeavour to introduce solutions that can be executed in meaningful ways to help organisations combat bad actors.

Having a multi-solution approach to identity verification and security can offer several important benefits for organisations, particularly in terms of enhancing overall security, flexibility, and resilience.

Explore ADVANCE.AI’s suite of AI-powered facial recognition and document verification solutions here.

As the Country Manager of ADVANCE.AI in the Philippines, Michael Calma sees it as his mission to accelerate financial inclusionand sustainabilityin the Philippines by helping sectors including banking, financial services, fintech, payment, retail, and e-commerce, using big data and AI to solve digital transformation, fraud prevention, and process automation. His commitment to Philippines’ high-growth organisations stems from a common passion: to offer end consumers more inclusive, safer, frictionless experiences through products and services these companies provide.

Mike has previously shared on Strategies to protect, build and grow, and Creating a digital future in the Philippines.

Mike-Blog-7Nov

Michael Calma, Country Manager of ADVANCE.AI

Overview: Over the past year, the Philippines saw a slew of new initiatives aimed at improving financial inclusion among urban and rural dwellers. These include the introduction of agent banking, Starlink satellite internet, and social enterprises like DigiCOOP. The Government’s National Strategy for Financial Inclusion (NSFI) 2022-2028 will also help drive financial inclusion initiatives. To leverage these “bright spots”, businesses must consider utilising technology to simplify access to loans and secure onboarding. These technologies include chatbots, mobile banking, electronic Know Your Customer (eKYC) processes, fraud monitoring solutions, and alternative credit scoring models. Businesses must also foster partnerships and raise digital literacy levels to ensure a safer and more inclusive financial service landscape. In the Philippines, the fact remains that only 56% of all Filipinos have a bank account. The first step to raising financial inclusion in the country, then, is to recognise that rural dwellers are less privileged when it comes to access to adequate infrastructure and education. Their adoption and confidence in digital tools also tend to be lower compared to their urban counterparts. While there is a clear urban-rural divide, Filipinos in rural areas have very similar banking needs as those living in urban areas. In fact, loan frequency is sometimes higher among specific rural communities due to limited economic opportunities and dependence on agriculture. The difference, however, lies in the fact that rural dwellers face multiple barriers to entry when it comes to financial inclusion.

Rural Banks

Challenges of Increasing Financial Inclusion in Rural Areas

  1. Lack of infrastructure in the far-flung regions of the Philippines: Aside from limited bank presence, internet and cell coverage can also be spotty and unstable in rural areas. This means that digital financial services, too, are unreliable and, at times, near impossible to use.
  2. A misconception by the rural population about statutory balance requirements: while many banks now offer accounts with no minimum balance requirements, about 45% of unbanked Filipinos still believe that balance requirements would prevent them from opening an account. As such, many have gravitated towards digital wallet providers, which do not have such requirements in place, instead of regular banks.
  3. Low savings rate in Philippines: The country has one of the lowest savings rates in the world, and this means that financial institutions have few incentives to invest in rural areas as the short-term return on investment can be deemed inadequate or unattractive for businesses.
  4. Technology fluency is lower amongst the older population: With younger, more digitally savvy Filipinos moving to urban areas for work, those left behind tend to be older, less technology fluent. Their appetite for digital financial services, too, is comparatively lower.

Bright Spots for Financial Inclusion in Rural Communities

All is not lost for the rural communities though. In recent development, the market is starting to see several bright spots in the Philippines that will hopefully facilitate greater financial inclusion in the near future.

To support infrastructure development in rural Philippines, Starlink, the satellite internet unit of Elon Musk’s SpaceX, was launched in the Philippines in February 2023. With subscribers gaining access to download speeds of up to 200 Mbps across the country, even those living in rural areas can now engage in some digital financial services.

In addition, agent banking is growing traction in the Philippines, whereby banking services are dispensed by more accessible retail outlets such as sari-sari stores, pawnshops, and pharmacies. Without the need to set up physical branches of their own, traditional banks can now provide limited financial services to rural areas via these agent banks.

Social enterprises, too, are sparing no efforts in improving financial inclusion. A great example is DigiCOOP, which is the largest online platform for cooperatives and over 1.3 million credit unions and farmers in the Philippines. Today, the digital platform provides remittance, insurance, savings, loans, and bills payment services at over 100 cooperatives and over 400 brick-and-mortar co-op branches, including those in rural regions. In March 2023, the platform partnered ADVANCE.AI to incorporate digital identity verification as part of customer onboarding.

The Philippine Government is also keenly focused on financial inclusion. In 2022, Bangko Sentral ng Pilipinas, the central bank of the Philippines, rolled out the National Strategy for Financial Inclusion (NSFI) 2022-2028, which contains specific interventions, outcome measures, and targets to guide all stakeholders working together to accelerate financial inclusion in the country. Its goal is to drive financial inclusion amongst the Philippines’ unbanked population and move toward more inclusive growth and financial resilience.

Rural Banks Can Consider using Technology to Bridge the Divide

Technology, too, plays a major role in improving access to digital financial services among rural dwellers.

For instance, according to official credit bureau data, almost half (45%) of the unbanked, many of whom are farmers, cited the lack of funds as the top-most reason for not owning a bank account. Even with the necessary funds, 40% said that they lacked the necessary documents to open a bank account. This means that, should they require the purchase of farming tools and equipment, they would not have access to critical financial loans through traditional credit scoring means.

To address this issue, rural banks can use alternative credit scoring solutions, which utilise a vast range of data sources beyond traditional credit reports to assess creditworthiness of unbanked individuals. This approach allows eligible individuals to access loans and other financial services. These alternative data sources include telco records, bill payment, rental payment, social media presence, and e-commerce website activities.

With a more holistic view of its customers, rural banks can automate loan approval processes, reduce default rates, offer smaller loans at scale, and eventually raise financial inclusion in rural communities.

With growing digitisation of banking services, improving financial inclusion is also about making virtual onboarding processes faster and easier to understand. This is especially important because, according to credit bureau data, 22% of unbanked were unaware of the procedures to open a bank account in the first place.

Rural banks can consider eKYC solutions that utilise artificial intelligence (AI) and machine learning (ML) to authenticate identities, perform document verification, and even detect fraudulent activities. Such processes can be as simple as providing a few personal details, scanning one’s identification card, or even the more sophisticated video verification or liveness detection. These utilities not only allow individuals to complete the KYC process remotely through digital channels, they help bolster the security posture of the entire financial services platform.

On that front, ADVANCE.AI currently offers a suite of solutions that cover end-to-end processes from document verification and liveness detection, to biometric and facial recognition technologies.

Finally, greater financial inclusion is also dependent on the level of trust in the technologies. After all, those unfamiliar with financial services platforms tend to worry about losing their money through hacking or inadvertent transactions. On top of educating the rural population on the safety of digital banking, financial services platforms must consider fraud monitoring and anti-money laundering solutions to minimise risks and to ensure that users are shielded from fraudulent transactions in the first place.

Watchlist screening, in particular, helps to screen customers and transaction data against various government watchlists and databases to identify potential risks. To be better protected, rural banks can consider anti-money laundering solutions from ADVANCE.AI, and leverage advanced analytics and ML to build strong and reliable identity profiles of customers.

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Bolstering Digital Literacy in the Philippines

At the end of the day, social enterprises, government interventions, and advanced technologies can only go so far. Businesses must do their parts also to improve financial inclusion. This can be achieved with a two-pronged approach.

The first is for local businesses to partner government and consumer groups in raising digital literacy levels across the board. At a median age of 25 years old, most Filipinos today are fairly digitally savvy. Smartphone penetration rate is at 76% and they are spending an average of nearly four hours on social media each day. However, such trends have yet to trickle down to lower socio-economic classes and rural areas.

The second is to find the right technology vendor and partner, who can provide the necessary technologies and tools for all your end-to-end anti-fraud, eKYC, and alternate credit scoring solutions needs.

It is important for public and private sector stakeholders to work together and make sure that no one is left behind in the digital finance revolution. Together, all parties have a part to play in creating a safer, more robust financial service landscape for all. The tools are at the ready, and it is up for the hearts, minds, and action to follow through.

ADVANCE.AI Academy is an exclusive webinar series created to provide insights on available fintech services for the APAC region. Watch the series on-demand now to learn about how eKYC, alternative data, and KYB solutions can bolster financial inclusion efforts among the rural and unbanked population in the Philippines. Or you can take action now: Start a conversation with us today.