Botswana launches national eKYC project to make bank verification easier

If you have ever opened a bank account in Botswana, you probably know the paperwork that comes with it. You may need your Omang, proof of address and other documents before the bank can verify who you are. Botswana is now trying to make that process less dependent on paperwork. The Bankers’ Association of Botswana (BAB) has launched a national electronic Know-Your-Customer (eKYC) project that allows banks to verify customer identities against the national citizen database. 

The government says the system is intended to make customer verification quicker while helping banks meet their KYC and anti-money laundering requirements. The idea is fairly simple. Instead of asking customers to keep producing certified copies of their identity documents, banks can check the information electronically. For a customer, that could mean less time spent getting documents certified and submitting them to a bank. For a small business owner, it could remove one more bit of administration from the process of getting a business account or dealing with a bank.

The problem is the paperwork

KYC is not something banks can simply do away with. Banks need to know who their customers are, who owns a business and, in some cases, where the money going through an account comes from. The problem is how much work can sit behind those checks. Botswana has historically relied heavily on physical identity documents. A World Bank assessment noted that citizens often had to use photocopies of their national IDs that were stamped or certified before they could use them for transactions. 

It also pointed to the fraud and data risks that can come with repeatedly passing around copies of identity documents. The eKYC system changes the part where the bank checks the identity document. Instead of relying only on a copy handed over by the customer, the bank can verify the identity information electronically against the national database. That does not mean KYC disappears. It means one part of it can be done differently.

What this means for a small business

For a small business, the benefit is not particularly complicated. Imagine a person who has just registered a company and now needs a bank account. They already have to deal with company registration, tax requirements, suppliers and everything else involved in getting the business running. Having to repeatedly provide certified identity documents adds another step. If the people behind the business can be verified electronically, that part of the process can become easier.

It is also useful when banks need to update customer information. Small businesses change. Owners change addresses. Directors change. A business may add another person who is authorised to operate its account. Those changes still have to be checked, but electronic verification can reduce some of the manual work involved. It is a small change, but small businesses tend to notice small administrative problems because the owner is often the person doing the paperwork.

It is not a shortcut to a loan

There is an important distinction here. eKYC can help a bank confirm who you are. It does not tell the bank whether your business deserves a loan. A small company applying for financing will still have to provide financial information and meet the bank's lending requirements. The same applies to other financial products. So a faster identity check should not be confused with easier access to credit. What it can do is remove one of the early steps that has to happen before a bank can deal with the customer. That could become more useful as banks put more services online.

Fintechs could use the same infrastructure

The project could also become useful outside traditional banking. Digital lenders, payment companies and other financial businesses have to verify customers too. For a fintech, this can be an awkward part of the customer journey. Someone may download an app because they want a financial service, only to be asked to upload several documents and wait for someone to check them. A national verification system gives financial companies another way to handle that process. The Bank of Botswana has been working with government, banks and other players on projects to modernise the country's payments and financial technology infrastructure. That creates room for companies building services around payments, identity verification and financial technology.

There is work for local tech companies

The eKYC system itself is only part of the story. Banks still have to connect their systems to it, keep those connections working and protect the information moving between different systems. That is work that technology companies can provide. Botswana Savings Bank, for example, has previously sought local contractors for an eKYC and anti-money-laundering automation system, including work involving document verification, core banking integration, customer risk profiling and sanctions screening. For local IT businesses, that points to a practical opportunity. They do not need to build a national identity system to get business from the move towards eKYC. They can work on the software, integration, security and support services that banks need around it.

Businesses still need their records in order

Going digital will not make incorrect information disappear. If a company's ownership details are outdated, a director's information has changed or the documents held by different institutions do not match, the business can still be asked to sort it out. In fact, electronic checks may make those problems easier to find. For SMEs, that makes it worth keeping company records, identification documents and banking information up to date. It is not exciting work, but it becomes more important when more institutions start checking information electronically.

The useful part is what happens at the bank

Botswana has been working towards electronic KYC for several years. The Bankers’ Association launched an eKYC system in 2021 that allowed commercial banks to verify identity cards against the national citizen database. At the time, the government said the system could eventually be extended to other financial institutions. The current push therefore needs to be judged by what changes for customers and businesses, rather than by the fact that another digital system has been launched. 

If a business owner can open an account without getting multiple documents certified, that is useful. If a bank can verify a customer without manually checking every document, that saves time. And if fintechs can use the same infrastructure to bring customers onto their platforms, it could make some financial services easier to deliver. For SMEs, that is probably the part worth watching. The real value of eKYC is not that banking becomes “digital”. It is that one more piece of paperwork may no longer need to stand between a business and its bank.