Video KYC – Where Technology makes Compliance Easy
What is Know-Your-Customer (KYC)?
Whenever an individual buys a financial product from a regulated entity, it is important to know and confirm the customer details. This is a mandatory requirement of the Central Bank and has to be complied with. The process usually involves filling up a separate form with personal details and submitting photocopies of the identification documents.
The RBI decision to allow Video KYC for completion of Know Your Customer regulations in January 2020 heralded a new way of doing business. Fintech companies immediately swung into action and designed software that could comply with all the regulatory requirements within minutes over a live video call.
So let us explore the features of the Video KYC Platform in detail-
Live Video Streaming – The entire process is completed over an HTML5 browser-based call between the customer and the authorised representative of the regulated entity which is recorded.
Geotagging of Customer – The location of the customer is captured using geotagging to confirm that he/she is physically present in India.
Upload KYC Documents – Once the customer uploads the PAN card or Aadhaar card the details are verified with the issuing authority and matched with the customer details. This is done by the platform by fetching details from the KYC Registries.
Aadhar offline e-KYC – The system does offline verification with Aadhaar XML with file generation not older than 3 days.
Audio-visual Interactions – The audio-visual interactions involve random sequencing of questions to establish the liveliness of the customer and to confirm that the recording is done in real-time.
Face Match with ID Card – The platform uses artificial intelligence to match the face of the customer with the identification document provided.
Name Match with ID Card – The software also completes the name matching by comparing the name on the form with the name mentioned in the identification document.
Banks have the flexibility to use either OTP based Aadhaar e-KYC verification or offline verification for the identification of customers. Other regulated entities can only do offline Aadhaar verification. The Aadhaar XMLused for this purpose or the Aadhaar encrypted QR should not be more than three days old. RBI has mandated that the regulated entities have to ensure that the live video customer identification process is seamless, secure, end-to-end encrypted and completed in real-time. So a live video-based KYC is mandatory and cannot be substituted with a recorded version.
Video KYC is now acceptable for all forms of account opening be it a Bank account, Demat, trading account, a loan or even an insurance account. The Insurance Regulator IRDAI realised the convenience of the Video KYC and gave the green signal to insurers to use them for faster customer onboarding during the Covid-19 pandemic.
What are the benefits of using Video KYC?
Convenience – Video KYC is an extremely convenient process for the customer as well as the regulated entity as it can be completed anytime, anywhere. This gives sufficient flexibility to the customer to complete the process without any hassles.
No Paperwork – The normal KYC process involves filling up forms covering personal details and providing photocopies of identification documents. These would then be verified by the regulated entities with the issuing authority. With Video KYC there is only one live video call where the soft copy of the identification document is uploaded. There are no forms to be filled which makes the process hassle-free and saves time and cost as well.
Easy Process – The simplicity of the process is what makes it so appealing. All the customer needs to do is a live video call with the authorised representative of the regulated entity at a convenient time. The identification document needs to be uploaded. The representative guides you through a couple of questions, a live frame is clicked and the process is complete.
Improves Operational Efficiency – The complete process takes a few minutes. Imagine the number of man-hours spent in filling a separate form, photocopying the identification documents and submitting them personally to the entity. The entity spends time getting the details verified. The whole process could take a couple of days. The Video KYC has reduced it to a few minutes while managing the risk.
Faster Customer Onboarding – The purpose of KYC is to complete a mandatory requirement before opening an account. Video KYC ensures that it expedites the process of customer onboarding by cutting through the routine paperwork and replacing it with smart technology.
Detection of Identity Theft – Video KYC Platform uses Artificial Intelligence to compare the face of the customer with the identification document provided. Any discrepancy is identified and objections raised. This can be used to prevent cyber frauds that involve identity theft. Another benefit is that since photocopies of original documents do not need to be submitted, the risk of criminal misuse is eliminated.
Banks can use the Video KYC Platform for the Re-KYC process to keep the customer records updated. It is expected that soon, paper KYC will be replaced with Video KYC by all regulated entities as the time and cost benefits of this technology are huge. The digital revolution in India is changing the way we look at financial transactions. It is reaching out to the underserved areas of the country and this could yield exponential growth in the coming years.
The Video KYC Platform is a prime example of keeping things simple while managing the risk and compliance with regulatory requirements.