The digital economy in Africa has played a significant role in driving the continent’s GDP, producing over 300,000 formal jobs and over 1.1 million informal jobs. Today, the ICT sector is a major contributor to national GDP calculation. However, as it has its upside, it also has its downside issues. For instance, according to the International Data Corporation (IDC), the rise in digital technology application and adoption in Africa has also caused a tandem rise in fraudulent online transactions estimated to cost USD 4 billion annually in cybercrime.
Consequently, African governments are beginning to legislate procedures to curb anti-money laundering and financial terrorism. According to the United Nations Conference on Trade and Development, 39 out of the 54 African countries have established cyber security legislation. Similarly, many firms are rapidly implementing identity verification and Know Your Customers (KYC) compliance procedures to manage the incidences of identity theft and eventually reduce losses due to fraud. Some of the sectors most prone to cyber-attacks that are taken steps to tighten the noose include the telecommunications, real estate, online gaming and gambling industry, travel industry, alcohol industry, pay-tech industry, and other emerging industries.
In a recent report titled ID Verification & User Onboarding Trends in Africa Report by Tech Cabal in collaboration with Dojah, an ID verification and onboarding service provider, the trend analyses show that identity verification and KYC models will continue to evolve in response to technological advancements and changing regulatory environment. The report analysed data from over 300 companies across over 10 African countries to show the distribution of checks across industries and the most common ID used for checks. The report shows that financial services account for 67% of the total ID Verification checks performed in 2022 – followed by the Non-profit sector (12.13%), Technology firms (5.59%), and Lending/BNPL (3.78%).
Other sectors such as e-commerce, Agritech, Healthtech, Travel and Logistics, Proptech and Edutech are beginning to appreciate the importance of ID verification checks.
The report highlighted some best practices for ID Verification including, the adoption of technology to automate ID verification process and reduce human error; splitting verification into levels according to the customers’ subscription to allow for data management and control, and providing flexible verification options.
The major trend in the sector for 2023 is the application of Artificial Intelligence (AI) in tracking real-time changes and extracting real-time information about customers while providing enormous value to the KYC process at the onboarding level. The future of KYC and identity verification models will be shaped by digital methods for biometric authentication. As these technologies continue to advance, they will play an increasingly important role in ensuring the safety and security of online activities in Africa.
Get up-to-date with the latest KYC trends and insights. Download the report here.
