SAMA’s new rules push consumer banking into the digital age

Key changes have just been introduced around the way Saudi Arabia lenders verify customer documents, which will speed up banking and cut fraud. New regulations by the Saudi Central Bank, known as SAMA, will change how banks electronically share documents effective April 1.

The rules say that digital verification procedures to guarantee the authenticity of documents must be brought in. This supports the wider objectives of Vision 2030, for economic and social reform, to stimulate the digital transformation of the banking industry and provide transparency.

In effect, the rules will make it easier for banks and their customers to ensure that documents shared between institutions and consumers are legitimate.

This system may be used when providing banking documents as proof, such as when applying for a mortgage or credit card, taking out a loan, submitting papers for travel visas, or firms issuing invoices. This replaces the traditional process of going to a bank and requesting stamped documents, or an electronic issuance that might produce a digital copy of a bank statement but without any means of showing its veracity. Now, both the customer and the recipient of the document can trust that it is real.

These kinds of systems are already in use in certain European countries. For example, the digital security platform IDnow Group has worked with organisations such as the Ministry of Interior in France and the General Directorate of Public Finance which is responsible for taxation in France, as well as other bodies. Overall, the business issues more than 200 million visible digital seals annually, which rely on digital signatures to protect the integrity of data.

The new rules significantly reduce the likelihood of fake documents being used or accepted as proof. In this way, the rules will have a positive impact on reducing risks for banks against people using false information to steal or manipulate identities.

Fraud and cybercrime are of great concern to Saudi adults. Nearly 82 percent of 1,230 Saudi nationals were concerned about identity theft such as personal data being stolen or somebody impersonating them, according to 2021 research by doctor of engineering Abdulaziz Alzubaidi of Umm Al Qura University, Mecca. Over 21 percent of those questioned said they had been victims of cybercrime, including loss of personal data, the study added.

Every year, Saudi banks spend millions of riyals ensuring they know your customer and anti-money laundering procedures are rigorous. These latest rules from SAMA underline its robust stance on protecting consumers and businesses.

Beyond compliance, banks may find that the new system provides other significant advantages. Around 63 percent of bank customers abandon their applications due to time-consuming onboarding systems, according to a white paper by Fintech Saudi. If that’s the case, then having quicker and more secure digital processes that automatically verify documents, can only provide advantages when taking on new customers. 
Similarly, rather than using laborious manual processes, digital systems can save banks a lot of time across a range of other tasks. The central bank’s new rules add up to a win-win for financial institutions and customers alike.

• Oliver Obitayo is chief commercial officer of IDnow Group.