Chip-embedded ID cards are going some way to protect people and their information, Le Toan

Asia Commercial Bank (ACB) last week partnered with FPT Information Systems to introduce chip-embedded national ID card authentication. ACB plans to pilot an online credit card opening feature in July, utilising this authentication method.

ACB seeks to gradually implement customer authentication based on the comprehensive population database, ensuring a seamless transition without compromising the customer experience.

Similarly, PVcomBank has collaborated with Quang Trung Digital Service and Technology to leverage chip-embedded national ID cards and electronic Know Your Customer (eKYC) methods for account opening.

In a synchronised effort to elevate the industry, other major banks including BIDV, Vietcombank, and VietinBank have already connected and tested transactions such as deposits, withdrawals, and account opening through customer authentication based on the national population database.

Furthermore, some Vietnamese banks are venturing into digital-based lending, enabling customers to access credit without physically visiting a bank branch. A number of banks have also experimented with citizen credit-scoring systems based on population data.

By utilising this data-driven approach, banks can extend unsecured personal loans in smaller amounts, thereby curbing illegal lending activities and enabling competitive interest rates for consumer credit.

Vietcombank has undertaken a pilot initiative to integrate its system with the national population database for customer authentication and identification through the employment of VNeID. Concurrently, the bank is exploring a citizen credit scoring model as a supplementary metric in the evaluation and endorsement of modest-value consumer loans and the issuance of credit cards to clientele accessing VCB Digibank.

Likewise, Tran Cong Quynh Lan, deputy CEO of VietinBank, accentuated the paramount importance of precise data extraction from the chip-embedded citizen ID cards to mitigate potential inaccuracies arising from optical character recognition when procuring personal particulars.

“This integration approach, encompassing credit scoring, online customer verification, and multi-faceted information validation, holds the potential to optimise post-processing endeavours while minimising expenditures and temporal outlays for both customers and banks alike,” he said.

While eKYC has gained significant traction in recent years, there are some certain challenges to address, including accurate recognition and recording of information from faded or old identification documents, as well as the risks of fraud.

To combat these challenges, the incorporation of AI and the utilisation of accurate data from the national population database play crucial roles in ensuring precise customer identification. The encryption and digital signatures employed to safeguard the data of 80 million chip-embedded national ID cards, thus fortifying the security of financial transactions.

Phan Thanh Toan, director of the ID Check project at FPT Information Systems, said the key obstacle lies in determining authenticity.

“Sophisticated fraudsters exploit loopholes in eKYC, using methods such as expired or photocopied documents and photo replacements when opening accounts and conducting transactions. However, through the integration of AI and reliable data, the accuracy of customer identification can be significantly improved,” Toan said.

What is more, the State Bank of Vietnam’s (SBV) Agency for Prevention of Money Laundering and the Ministry of Public Security are planning to leverage personal identification and immigration information services to support anti-money laundering efforts facilitated by the SBV.