Regulation, innovation and safeguarding customers: the case of Absa Bank - Know Your Customer

Abstract

The study assessed Know Your Customer (KYC) regulation for protecting customers at Absa Bank Uganda. KYC guidelines and regulations in financial services require professionals to verify the identity, suitability, and risks involved with maintaining a business relationship with a customer. The study objectives The study assessed Know Your Customer (KYC) regulation for protecting customers at Absa Bank Uganda were: to assess the Know Your Customer regulation at Absa Bank Uganda; to identify the elements that contribute to customer weariness while adhering to Know Your Customer regulations; and to evaluate Absa's framework for client protection through the Know Your client initiative. The study adopted a convergent parallel research design using a quantitative and qualitative approach. The units of inquiry entailed the following: managing director, head of departments, supervisors and staff of Absa Bank Uganda. Quantitative data was analyzed using IBM SPSS Statistics Version 20.0 and qualitative data from interviews was sorted, coded and entered in Nvivo version 20 to generate themes. The study established that the regulation of KYC requires Ugandan national clients to present the national IDs validated through the national NIRA portal Non-Ugandan clients present the passport, refugee ID card, employment status, declaration of PEP status, and Tax Identification Number. KYC entails customer call backs and follow ups on customer transactions complaint, business registered name, certificate of incorporation and stock exchange registration to ensure due diligence at Absa bank Uganda. However, the following were the challenges: inaccurate information uploaded by customers, KYC systems failure to reach customer, inconsistent in completing customer requests and KYC system error at Absa Bank. Customer weariness involves use of comprehensive verification procedures, functionality of e-KYC system for customer interface, NIN verification and NIRA validation system for the national IDs for due diligence at Absa Bank. The study recommends that Absa should set guidelines to verify the client’s identity, customer identification program, ongoing monitoring during on boarding, customer transaction types, digitizing of banking system, review of financial and non-financial crime trends, evaluation of employment history, frequent checks on customer complaints and regular upgrading of KYC framework for due diligence