Know Your Customer” or KYC refers to the process of authenticating the identity of the customers and clients either before or during the start of the business relationship. KYC came into existence in 2002 in India. According to the Reserve Bank of India (RBI) notification, it has made it mandatory for all banks to carry out KYC of customers since 2004. In terms of the provisions of the Prevention of Money-Laundering Act, 2002 as notified by the Government of India, Regulated Entities (REs) are required to follow certain customer identification procedures while undertaking a transaction either by establishing an account-based relationship or otherwise and monitoring their transactions.
Though the banking and financial sectors (BFSI) were the first-responders to the mandate, the need for conducting KYC is widespread now and covers other industries such as mutual funds, NBFCs, lending companies, e-wallets, to name a few.
How to Get KYC Done – Steps to Get Started
Taking a look at different ways of getting your KYC verification completed
Online KYC Process
Offline KYC Process
The New Way of Customer Authentication – Video KYC
How is Video KYC different from Usual KYC?
There are various methods that people can use to complete their KYC for financial transactions and other such activities. As already mentioned, Know your Customer or the KYC process is to authenticate the user as per the guidelines of RBI, PMLS by the Government of India, SEBI, IRDA, and other regulatory bodies.
How Does Video KYC Work?
Just like one can choose to go for an offline KYC registration or an online KYC verification process, the RBI has recently approved using a Video-based Customer Identification Process (V-CIP) as a means to achieve paperless KYC. Similarly, Pension Fund Regulator PFRDA has also provided their approval for the paperless KYC for the NPS account opening. With this, Video KYC has come into the picture. Video-based KYC means that users can complete remote KYC from anywhere via a video call. The verifier authenticates the documents, does a liveliness check along with establishing the location of the person – everything is done on a video call, unlike the traditional ways.
What are the Regulatory Requirements for Video KYC?
| Regulatory Guidelines |
|---|
| Video recording; Capturing live photo of customer |
| Offline Aadhaar Verification; XML file not older than 3 days |
| Capture clear image of Customer’s PAN card |
| PAN card verification from database |
| Geo-tagging to ensure customer is in India |
| Photograph of customer to be matched with the one on IDs |
| Match details on ID cards with that on form |
| Randomization of sequence/type of questions |
| Concurrent Audit |
| Identification and liveness of customer beyond doubt |
| Video triggered from RE domain |
| Video to be saved securely with date/time stamp |
| Use of latest AI and Face recognition technology |
| Redact Aadhaar Number as per Sec 16 |
Video KYC – Compliant & Approved ID Verification Solution
KYC is an integral part of the customer onboarding process for all the banks, mutual fund platforms, NBFC, and other financial institutions and organizations under the purview of RBI, SEBI, or IRDA. Video KYC refers to using the video call as a channel to conduct the KYC verification process.
How to Do Video KYC?
Step 1: Visit the bank’s website and schedule a video call
Step 2: Automated confirmation on SMS or email with joining link
Step 3: Get on a video call with the bank official
Step 4: OSV Checks of Officially Valid Documents
Step 5: Liveliness check with random body movements, real-time image capture, etc
Step 6: Address Verification by the Customer with geo-tagging and Google maps
Step 7: Face Match with Documents & Validation
Step 8: Verifier passes or rejects the KYC Application after verification
Step 9: The auditor reviews the details and processes the application
Step 10: Customer notified when KYC is successful or failed
Benefits of Video KYC Solution in the Contactless World
Customers and prospects look for convenience. And since the world is going digital and millennials and Generation Y redefining the customer service expectations, it’s time for the financial sector to lead from the front. Digitize your KYC verification process by using the best Video KYC software solution to deliver an effortless customer experience while ensuring quicker KYC completion at a lower cost and higher customer satisfaction.
Remote Customer Onboarding: Complete KYC by digitizing OVD collection and face verification
Faster KYC Completions: Start to finish KYC verification process in less than 3 minutes
Dropoff Reduction: 20% reduction in drop-offs with frequent customer follow-ups using dialers and outbound calling tools
Cost Optimization: Up to 40% savings on KYC completion cost with fewer staff and infrastructure requirements
Customer Convenience: Customer easily completes KYC from the comfort of their home even at low internet bandwidth
How Video KYC Solution Works for Different Business Verticals?
Understanding how different sectors can use the provision of video KYC to their advantage while having a look at who is eligible to opt for video-based KYC.
Video KYC for Banks and Insurance Providers
You might have encountered a KYC form or the bank official asking you to complete your KYC for account opening or SMS alerts or to avail other banking services. These formalities are a mandatory compliance requirement for the banks to prevent money laundering and identity theft. A video KYC solution not only allows the bank customers to do their KYC from their homes but also makes the job of the bank official a lot easier too while saving their time.
Video KYC for Mutual Funds
Capture details of the customer electronically to verify their identity and allow them to open a Demat account and deal in the stock market. The mutual fund companies can significantly increase their customer outreach and fasten the customer onboarding process with a Video-based KYC solution which makes it easy and productive for mutual funds platforms to complete customer KYC.
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Video KYC for Digital Payments
Rather than investing in field agents and going door-to-door for collecting address proof and identity proof, now your officials can do all that from a single location. At the same time, with video KYC for the e-wallets and digital payments players you get to increase your customer base and penetrate tier 2 and tier 3 cities without incurring a huge cost while ensuring customers’ convenience faster KYC process.
Video KYC for NBFCs
With a video-based customer identification process, make presence-less and paperless banking a reality for the fintech and small financial banks and lenders. Enable the regulated entities to do the remote onboarding while reducing the KYC process to minutes rather than days. Additionally, the neo-banks, lending fintech, and prepaid wallet players can reduce their costs further by eliminating the need to go out to them and thus, making small ticket accounts profitable.