This article first appeared in Digital Edge, The Edge Malaysia Weekly on May 12, 2025 - May 18, 2025

Establishing trust among consumers is a critical challenge for digital banks. As cyberattacks and identity fraud become more commonplace, security is vital to gaining new users.

This is especially true in the onboarding process, where customers create an account with the bank. Customers want security, knowing their money will be safe in the bank’s hands. But if there are too many safety barriers, the act of signing up for a bank account may feel like it is more trouble than it is worth.

It was this struggle of ease versus security that led GXBank to partner with digital security company Entrust last October to craft a unique know-your-customer (KYC) experience. The collaboration started when GXBank saw an opportunity to streamline the onboarding process.

“Customers usually want two things: to make [their] life easier/more convenient and for it to be affordable. So it was very clear to us in Malaysia — we had a foundational pain point where people had to go to branches [to be onboarded by the bank],”

Innovating the online onboarding process, he says, is something that traditional financial institutions tend not to focus on, as they tend to rely on physical branches and call centres. But it is different for digital banks.

From the start, GXBank’s goal was to enable customers to open an account on their mobile app within minutes and with ease. To do this, it needed to remove friction, or at least minimise it, without compromising security.

Friction, in this case, refers to barriers customers need to overcome to complete the registration. It involves providing details like name, religion, address or official documents to prove their identity.

To reduce these frictions, GXBank’s account registration asks only the minimum number of questions a bank requires to comply with Bank Negara Malaysia’s regulatory requirements while finding ways to simplify and hasten the more time-consuming processes.

This was when Entrust came into the picture, through its subsidiary, Onfido, a London-based technology company specialising in photo-based identity verification.

“Instead of [the onboarding process] taking days or hours with the banking system, it should be done quickly. That’s what Entrust did, using AI to provide a seamless journey with only a bit of friction that still maintains a secure way of onboarding,” says Harvinder Singh, regional vice-president of sales for the Asia-Pacific region at Entrust.

Entrust’s Identity Verification solution speeds up the registration process by requiring customers to take a photo of their official documents and a selfie using a smart device, after which the AI-powered identity verification solution checks that the ID is genuine and matches the selfie. Liveness detection then ensures the person behind the screen is real, preventing fraud while maintaining a smooth onboarding flow.

“For example, you only need to take a front and back picture [of your IC] and then take a selfie, and our machine learning algorithm will verify whether you are the legitimate individual of that document or not,” explains Harvinder.

This biometric data that is entered into the system is then used beyond the onboarding process — for validating customer credentials during transactions, making this system prevalent throughout the entire customer experience.

While this level of verification is an added friction, Harvinder says it is enough to give a sense of security while not making the customer feel like they are fighting the system just to use it.

The e-KYC system, he points out, is designed under four different value parameters, the first two being how online onboarding can increase revenue while ensuring customers do not drop off during the process, and at the same time follow the regulatory compliance set up by Bank Negara.

“In our experience, some companies will build in too much friction right at the beginning because they’re so concerned about fraud, so they don’t know how to have a balance,” he observes.

Digital banks typically have many frictions in place as security is essential to establish confidence among customers that their data is safe. Harvinder says the system will ask users to upload documents to verify the users’ identity, but errors may occur, resulting in users having to re-upload them, causing further friction.

Some take the opposite approach and ask for as little information as possible, but this is not the right approach either.

“As a digital bank, you cannot ignore trust. You are a bank, and banking — the entire thing — is built on trust … you cannot compromise on that,” asserts Kaushik.

The other two value parameters are building trust in the system so customers are comfortable using the platform and feel assured that the level of friction available is enough to protect them, and reducing fraud.

When it came to setting up GXBank’s e-KYC onboarding system, fighting fraud was one of the biggest challenges, thanks to the same technology that powers’ Onfido’s verification system: AI.

Harvinder says AI-centric companies need to build solutions to stay ahead of fraudsters. Fraud tactics like deepfakes use AI to create realistic copies and this has made creating fakes easier than ever.

Entrust has a Fraud Lab, where emerging tech such as deepfakes of biometric data and official documents are generated to train their models to catch fakes.

“This is something that we have designed in-house, which is a massive shift in terms of our innovation practices, and in terms of staying a little bit ahead of the fraudsters because [of] the kind of attacks that we have been seeing,” explains Harvinder.

But AI itself is not infallible; it can make mistakes like thinking a zero on a document is an “O”. This is the reason Entrust employs what it calls a hybrid system, which uses both machine and humans to check onboarding documents for fakes. While AI does the heavy lifting in identifying fraud, human fraud experts do the final checks.

GXBank decided early on that it wanted a hybrid model, leading to the partnership with Entrust. Kaushik stresses the importance of collaboration to create the best possible system.

“You realise very quickly that you can’t have competence in all areas. We believe in collaboration and integrating specialised expertise where it matters most,” he says. While that approach is far cheaper, security cannot be compromised on, a view he says his peers are beginning to concur with.

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