Market Overview

eKYC (electronic Know Your Customer) is a digitized online solution for confirming the identification of clients in a non-face-to-face manner. Triggered by the amendment to the Act on Prevention of Transfer of Criminal Proceeds in November 2018, deployment of the service has been considered mainly at financial institutions, and now the introduction has spread to almost half of all banks.
The identity verification solution is the means to confirm identity by utilizing eKYC verified identity information under the laws and regulations such as the Act on Prevention of Transfer of Criminal Proceeds and the Mobile Phone Improper Use Prevention Act, enabling to simplify the identity verification procedures and to verify the customer continuously. The solution, therefore, is regarded as a promising area to expand the eKYC market, attracting increasing numbers of eKYC businesses to try handling it.

The domestic eKYC & identity verification solution market for FY2022 has generated 6,918 million yen (based on the sales at businesses), 122.1 percent of the size in the previous fiscal year.

Noteworthy Topics

Expanded Use of Public Identity Verification and Influence on eKYC Market

In online identity verification, use of public identity verification that is stipulated in Act on Prevention of Transfer of Criminal Proceeds has been increasing. The number of My Number Card issued is 87 million as of the end of April 2023, which applies to 69.8% of the population.

Public identity verification is the method that utilize the electronic authentication function of My Number Card, which can be done by reading the IC chip of My Number Card by a smartphone. As the IC chip is difficult to counterfeit, the method is expected also from the fraud prevention aspect.

Health insurance cards and driver’s licenses that have been conventionally used for identity confirmation are announced to be integrated into My Number Card hereafter. As public identity verification is assumed to become the center of eKYC for the future, the policies at eKYC businesses and how companies introducing eKYC solutions respond to public identity verification are attracting attention.

Future Outlook

The eKYC & identity verification solution market size for FY2026 is expected to reach 19,757 million yen.

Financial institutions are expected to continue deploying and utilizing eKYC services: All the city banks have finished or have determined the deployment; 36 of total 62 regional banks, and 18 of total 37 member banks of the Second Association of Regional Banks have already deployed eKYC (both as of end of May 2023), and the rest of the banks is expected to deploy the service one after another.

At financial institutions, use of eKYC can expand in various procedures. While identity verification is currently used for initiation of transactions at opening of an account, there are moves to expand using of this function to other areas. As banks tend to shift their face-to-face transactions to online, increasing number of banks is considering the use of eKYC for online procedures to modify addresses, telephone numbers, etc.

Research Outline