eKYC Market in Japan: Key Research Findings 2021

eKYC Market for FY2020 Attained 4,083 Million Yen, 270.0% of Previous Fiscal Year

Yano Research Institute (the President, Takashi Mizukoshi) carried out a research on the domestic eKYC market, and found out the current status, the trends of market players, and future perspectives

Transition and Forecast of eKYC Market Size
Transition and Forecast of eKYC Market Size

Market Overview

eKYC (electronic Know Your Customer) is a digitized online solution for confirming the personal identification of clients in a non-face-to-face manner. In November 2018, the Act on Prevention of Transfer of Criminal Proceeds was amended, which led companies, mainly financial institutions, to consider deploying eKYC. Implementing of the solution has actually increased at many companies by 2020. The domestic eKYC market generated 4,083 million yen in 2020 (based on the sales at businesses), 270.0 percent of the size of the previous fiscal year.

Noteworthy Topics

Amendment of Act on Prevention of Transfer of Criminal Proceeds Caused Reduction of Process of ID Confirmation in a Non-Face-to-Face Manner

In November 2018, orders to partly amend the regulation for law enforcement regarding the Act on Prevention of Transfer of Criminal Proceeds were made public. It allowed changes in the non-face-to-face method of verifying personal identification.

Conventionally, confirmation of personal identification in a non-face-to-face manner was performed by sending a copy of identity verification documents via registered post to be received by the addressee only. The Act was amended to add other non-face-to-face method for identity verification, which is to use dedicated software without the need of mailing, allowing eKYC to be such a method. Disuse of mailing ensures shorter time for identity confirmation and quicker provision of the solution. Also, reduction in the processes of identity confirmation improves convenience for the customers.

Future Outlook

The eKYC market size based on the sales at businesses is expected to reach 6,300 million yen.

Deployment and utilization of eKYC at financial institutions are projected to continue being in progress: As of the end of May 2021, all the city banks have finished or have determined the deployment of eKYC; 17 of total 62 regional banks, and 3 of the total 38 member banks of the Second Association of Regional Banks have already deployed eKYC, and the rest of the banks is expected to deploy the solution one after another.

In addition, many of the businesses in those industries that do not require confirmation of identity are highly likely to strengthen the verification of identity, after all, to improve security for the users to use services such as C2C-related services, matching apps, rental services, etc. and to raise the trustworthiness within the community. Therefore, eKYC is likely to be used as a method of assuring the client when providing safe online services.

Research Outline

1.Research Period: February to June 2021
2.Research Object: eKYC vendors, financial institutions
3.Research Methogology: Face-to-face interviews by expert researchers (including online), and literature research

About the eKYC Market

eKYC is the abbreviation of electronic Know Your Customer which is digitized online procedures to legitimately confirm the personal identification of clients in a non-face-to-face manner. It is to conform to the amended Act on Prevention of Transfer of Criminal Proceeds (the amendment effective since November 2018), allowing the identity confirmation method to be completely online without the need of mailing and other procedures.

The eKYC market in this research is the market of Know Your Customer solution, the procedure of which is concluded online (eKYC). The market size is based on the sales at eKYC solution providers.

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