Use Cases for Video KYC — How this Technology Can Transform Key Business Processes
In January 2020, the RBI released a circular allowing banks and other businesses to use Video KYC as a means of verification. Video KYC implies putting in place a consent-based, video-enabled Customer Identification Process that is 100% remote and compliant with all the RBI regulations.
How does Video KYC work?
Video KYC requires the use of some of the latest technologies — from geo-tagging to AI-powered face matching to ML-enabled OCR. Here’s a snapshot of how the video KYC process actually works:
Video KYC is basically a 2-way video call between customer and officer where:
- The customer uploads KYC documents and starts the video call
- The officer at the other end approves the geo-tagged location of the customer
- Customer aligns face and the officer captures a profile photo
- Customer aligns original PAN card and officer captures image
- There is an Artificial intelligence-based face matching of the customer in video with the ID card (PAN/Aadhaar) present
- The customer then answers 3 random interactive questions to ensure that the conversation is taking place in real-time
- The officer approves the answers and generates the KYC Risk Scorecard report
Use cases for video KYC
Given that video KYC has the potential to slash onboarding costs by up to 90%, it’s going to be a huge boon for finance sector businesses.
Video KYC can be used across finance sector enterprises — from banks, NBFCs, and Insurance to Housing Finance and Stock Brokers to E-Commerce, Wallets, Payment Gateways and Aggregators.
Here are some of the most interesting use cases for video-KYC
Use Case 1: Re-KYC for activating dormant trading accounts
This is a massive problem in the trading industry. People create Demat & Trading accounts and then forget about them, only to come back to trading when they have some free time or their interest gets reignited. In this situation, a physical KYC to reactivate a dormant account can become a huge barrier, which can now be resolved through one video call.
Use Case 2: Complying with SEBI/AMFI/RBI regulations
Entities that are regulated by AMFI/SEBI/RBI require an In-Person Verification (IPV) which can now be achieved via WebCam. Similarly, RBI regulated entities (which includes the entire banking sector) can now use video-based Customer Identification Program (CIP) and skip manual in-person verification completely.
Use Case 3: Merchant onboarding and verification for payment gateways
Onboarding businesses is currently a fairly painstaking process for payment gateways, in an otherwise digital ecosystem. Video-KYC will smooth this process in a big way, allowing payment gateways to now onboard small and medium enterprises in a matter of hours, rather than days.
Use Case 4: Contract staff onboarding for aggregators
The logistics sector (think Delhivery, Swiggy, Zomato, eKart etc.) is constantly onboarding contract staff (drivers, delivery boys, etc.). They either do it directly or via staffing companies. In either case, the entire onboarding process can become a major roadblock, especially when the business is growing quickly and companies need to move fast to meet the surge in demand. Video KYC can make this onboarding much smoother and faster.
Video-KYC is the second step (after digital KYC) which the RBI has taken to facilitate a smoother onboarding process. Given that Video-KYC is a 100% remote process that costs a fraction of regular KYC, it is expected to really smoothen the onboarding process, creating a far more seamless user experience. Its widespread adoption across the finance sector — from lending to insurance to fintech — will help us realize gains and efficiencies that may not have even been imagined yet.