How are e-Sign services & e-Stamping becoming the Ultimate Business Tools?

esign Services | estamping Services | Digital Signatures

How are-Sign services & e-Stamping becoming the Ultimate Business Tools?

The finance industry was both manual and monotonous until a few years back. However, the pandemic initiated the wave of digital transformation in the banking & financial industry. Brimming with people and relying mostly on human connection; most of this industry’s work was done manually. This is why the social distancing norms proved to be a big blocker to this industry. This was one of those industries that evolved digitally to stay afloat and ahead of the curve, benefitting the most from this disruption. Being the driver of the economy, it was up to them to be the savior for other sectors who were facing an economic downturn. Two concepts that are now widely used are e-sign services or digital signature services and e-stamping solutions.

Impact of COVID-19

Amongst various operations in the financial sectors that got digitized, the industry saw the addition of a few components as well. Electronic signature or digital signature and e-stamping being the two most prominent transformations. The digitally revolutionized e-sign and e-stamp solutions are the primeval act of easing the contract signing process.

E-Stamping services isn’t a new addition and neither is an e-signature. They have long been in use even before the first industrial revolution. Thus, it is needless to say that digitization has revived the concepts of e-sign and e-stamp duty services again. With the number of identity and authenticity frauds increasing every day, it was absolutely imperative to develop a new system that facilitates digital contract or e-contract services.

Electronic Sign & its Necessity 

E-signatures or electronic signatures are the digital forms of traditional wet paper signatures. It is used in the identification, authentication, and verification phase of any transaction. Also known as digital signatures, e-sign are encrypted using encryption algorithms and hash functions. Digital signatures follow asymmetric encryption. The process starts with encrypting the contents of the documents with the sender’s private key. This produces a string of hash codes. This encoded message is then digitally signed and sent to the concerned person. The receiver then uses the sender’s public key to decrypt the sender’s hash and also generates its own hash version of the message. If both the plain texts match then the document is deemed to have maintained its integrity. 

This resulting code is unique and thus any discrepancies can be easily detected. This inter-level encryption makes it almost impossible to duplicate, change, or tamper with the document. Any attempt to duplicate or change the signature results in a discrepancy in the key. This makes signatures very secure and when used inside a digital contract, it makes the contract secured too. Mismatch in the signature violates the “Agreement” stage of the contract validation technique. Because of this inbuilt fraud protection method, e-sign services are significantly used that eventually helps to build a strong suit in any agreement.

What are e-Stamps?

As an alternative to physical stamps, e-Stamping is a digitized way of paying non-judicial stamp duty to the government. E-stamping services are a sustainable method as it eliminates the need for papers. It also is a much faster and easier method as it discards the otherwise hectic methods of standing in a queue for stamps. These e-stamping solutions are validated using a digital e-stamp certificate which is proof of its authenticity. Though the consideration price remains the same, it is still a more efficient way. The Central Record Keeping Agency of the central government-authorized centers in India from respective state governments produce these e-stamps, and currently, more than 10 states in India have it in use.

Looking forward to the Future

As the world is changing, we humans are getting more intertwined with technology. Starting from getting a cab in the morning, doing online shopping to signing a merger deal for the company, it is a contract in each and every step. We are often unknowingly taking part in digital contracts which involves the use of digital signature and e-stamping services. Every time we use a service or offer a service, it forms the very invisible pillars of a contract. 

With the increase in disruptive technologies like Artificial Intelligence and Machine Learning,  these electronic business modules can be made smarter to be able to predict and detect fraud. e-Sign and e-Contracts can also help in taking the necessary steps after detecting suspicious activities. There have been varied development and innovations in technology that can ease the present irksome processes. It is only a matter of time when we can see how these very small components like e-sign, e-stamping & e-contract, or electronic contract are bringing together the next digital revolution.

How has Compliance Technology revolutionized the regulatory world?

Compliance Technology Solutions | Automated Regulatory Technology

How has Compliance Technology revolutionized the regulatory world?

Compliance function has now become a part and parcel of any financial organization. All transactions, asset exchange, and management protocols are governed by a set of compliance regulations. Failing to comply with the regulations might invite legal penalties and fines. Many severe frauds and engagement in illicit activities lead to the permanent shutdown of the company. All of these ramifications are quite disastrous for a company. Thus, in order to deal with such situations, fintech startups have introduced automated compliance solutions which led to the evolution of compliance technology.

A thought-provoking podcast brought to you by Compliance Time discusses the whole domain of compliance and how efforts have already begun in the field of technology to confront several roadblocks. 

Pivoting the area of financial compliance, Densita, the host, interviews Shub Nandi, CEO and Co-Founder of PiChain to know more about the upcoming revolutions in the area of compliance technology. The podcast series covers topics related to fintech startups, regulatory solutions, compliance technology, and dives deep into the other terms associated with it. Updating us on the ongoing happenings, this podcast will fill you in with various compliance information.

The discussion starts with how AI and Blockchain, two prominent technologies, are being used by RegTech & Fintech startups to achieve sustainable compliance in the forms of confidence scores, costs, and efficient utilization of regulatory capital. The discussion then exhibits ideas and thoughts of compliance officers and what worries them most in the field of compliance. 

Shub answers the question of “What makes good compliance?” and presents a model where good and sustainable compliance is actually cost-effective.

Compliance policies also apply to a lot of non-financial companies as well. Even though it comes in different forms and names, Regulatory compliance technology still plays a critical role in running an organization. To get more insights into how the finance industry works & the compliance requirements, click on the link below.

How is Regulatory Technology proving to be a worthy tool?

Regulatory Technology Podcast

How is Regulatory Technology proving to be a worthy tool?

Being dominated by manual work, the finance & banking industry is now slowly shifting towards technology especially to meeting the growing compliance regulations. Artificial Intelligence and Blockchain are the foremost technology innovated by Regulatory technology firms which are gradually meeting the compliance requirements. This is bringing about a revolution in the financial industry.

Listen to a stimulating podcast brought to you by BizSoup Podcast Radio, featuring Shub Nandi, CEO and Co-Founder of PiChain. It covers all that you would need to know about the current reforms in the banking and finance industry. Detailing the use of regulatory technology, it traces how exactly the concept of cryptocurrency, bitcoins and other deep tech is giving rise to the financial revolution.

John DeBevoise of BizSoup podcast radio puts forth all queries involving compliance and its reformation in the finance world. Being an entrepreneur himself, this initiative of John is aimed at helping all budding entrepreneurs to develop their business and guide them through. Following the tagline of “If it’s in Business it’s Business Soup!”This podcast has come a long way and has helped numerous businesses to grow.

Starting with Shub’s experience in establishing a RegTech company, the discussion rounds up to how these solutions can help small businesses with their complex compliance problems and deal with financial crimes. Technology is not just helping in compliance but also in the field of threat identification and Anti Money Laundering. The discussion covers the various frauds under the banner of Money Laundering and how the banking system becomes vulnerable to these Laundering threats.

Blockchain being the token of cryptocurrency has a very unique immutable property which is now being used to ensure compliance in the finance industry. The finance industry is currently going through a technological revolution with deep techs like AI and blockchain being at the forefront of change. The current pandemic has also pushed the financial industry to accept digitization. Needles to say, this is an industry that needs to be prepared for a huge bout of ups and downs to come out as a better and more secured version of itself. 

To know more about the reforms brought by regulatory technology and the changes in the regulations, click below.

Regulatory Tech | Automated Compliance | Podcast

The Future of Compliance Technology: Paypod and PiChain

RegTech | Compliance Technology | Soarpay

The Future of Compliance Technology: Paypod and PiChain

The spike in financial crimes due to COVID-19 and continuous changes in the regulations have accelerated the adoption of Compliance Technology. Banks and financial institutions have to become more vigilant for suspicious activities. In order to keep up with the latest regulations and continuous monitoring of transactions, Regtech firms have developed simple and easy compliance solutions.

A worth listening podcast by Soar Payments on RegTech & sustainable compliance. Shub Nandi, CEO and Co-Founder of PiChain, a RegTech company with the mission to make compliance sustainable, provides great insights on how Regtech firms provide banks & various financial institutions with reliable & sustainable tech tools to ensure compliance. It elaborates how compliance technology helps to deal the spiking financial crimes. 

Paypod, an amazing podcast that explores The Payments and Fintech industry, created by Soar Payments will provide you with great insights directly from leaders in the Payments and Fintech industry. Scott, the Host of PayPod, interacts with business leaders and entrepreneurs across the field of fintech, security, mobile development etc and covers the trends brought by cutting edge digital tech in sectors of credit card processing, Bitcoin and many more!

Starting with Shub’s journey in the finance industry, the podcast moves on to the topics of sustainable compliance and regulatory technology; what makes it so necessary in today’s Banking and Financial Sector. He explains how and what builds up the pillars of successful compliance practices. It then touches upon the challenges faced by financial companies and organizations and how smart technology is getting adapted to ensure robust and more secured service.

We get to see some really valuable insights and numbers to the finance industry which otherwise is a topic that most people are unaware of. To get more insight into the subject and listen to the podcast, click below.

How Strong, Secured Digital Identity can avoid frauds in COVID-19?

Digital Identity | Cybersecurity in times of COVID-19 | Regulatory Technology

How Strong, Secured Digital Identity can avoid frauds in COVID-19?

Early March 2020 onwards, COVID has ensured that we stay in our homes and use digital services as much as possible in our daily lives. The only way to avail digital services is to have a valid, safe and secured digital identity.

What is Digital Identity?

Digital Identity is the information that is used on the Web to represent an externally present agent. This agent can be a person, entity or device. It is quite similar to a physical identity. ISO/IEC 24760-1 defines identity as “set of attributes related to an entity”. This is a trusted digital representation of physical identity. Digital identity helps to automate the processes or the scenarios where previously a physical identity had to mediate. Thus, this replaces the presence of a person.

Digital identity is a cumulative database of all the online activity of a certain person. Not only does it include passwords, login credentials but also the search activity and various other behavioural data captured while using digital applications. It is an online identity of a person, which is made available publicly and is an acceptable form of identity. 

With the introduction of Digital KYC (Know Your Customer), the customer onboarding process is completely automated. The digital technology used assists in gathering more and more data about the customer as it gets generated on the web. As the complete information about the customer is available online, it means that a holistic identity of the person gets created. If not handled properly, fraudsters and scammers can impersonate which has larger ramifications. Thus, due to increased digitization, the world is also witnessing an increase in various kinds of digital crimes. One such crime that has increased over the period has been digital identity theft. 

 

Why it is needed?

Cyberspace is ever-expanding with a huge amount of data. Millions of transactions take place on a regular basis. With these conditions, it is very necessary to know with whom one is exactly dealing with. With the expansion of technology, frauds are also expanding and the number of people with identity embezzlement also increases. In these scenarios, a verified digital identity is very important to ensure authenticity and confidentiality. Passwords and login credentials can be hacked anytime and thus, they do not stand as a proper way to achieve secured digital identity anymore. 

Digital identity is based on dynamic entity relationships. This relationship is built using many different data points such as a collective submission of search histories from multiple websites and mobile applications, signed petitions, badges, tokens, medical history, photos on social media, likes and comments on social media, forum posts. 

The identity verification is done by comparing a set of entity relationships between a new event and a past event, looking for patterns of convergence. However, any abnormality in the pattern can guarantee an attempt to forge an identity. Digital identity is made anonymous using a one-way hash. As this concept is about behavioural data and does just about certain fixed data points like passwords or a fingerprint, it is very hard to duplicate.

Identity fraud and how to keep yourself safe

Digital identity is the replica of a human being’s identity. If it falls into the wrong hands, it can be used to mislead others and the real person has to face its consequences. Even though there are a lot of positives to this concept, it is still very risky as a lot of personal data appears on the web and we are aware, anything on the web is hackable. Identity theft happens when a fraudster steals the identity of a person and engages in malicious activities with the information acquired. Logging in unsecured websites, social engineering, phishing attempts, weak password, location sharing systems, third party breaches etc. are very few ways in which data can be illegally mined in the web. 

And then comes the dark web, much more powerful and dangerous. Here, data is not just hacked, but sold to other entities. A stolen identity can cause a huge massacre here. According to Consensys, approximately 1.1 billion people worldwide don’t have a way to claim ownership over their identity. Talking about safeguarding your identity, there are multiple ways using which you can prevent identity theft. Protecting and securing passwords, checking bank account transactions and mails daily, not using public and exposed wifi etc. are some of the ways to be safe from ID theft.

According to Colton De Vos, in order to decrease the risk, you’ll need to engage in regular audits and penetration tests of your systems to identify network security threats and solutions. It’s crucial to implement controls from two-factor authentication to firewalls, as well as engage in policies, procedures, and guidelines for dealing with your current and future network security threats and vulnerabilities.

Contribution of Blockchain in strengthening Digital Identity & preventing frauds

The development of various technologies like AI, Blockchain have contributed in establishing safe and secured systems in any enterprise. Blockchain today is an enterprise-grade technology. It has remarkable algorithms that can prevent impersonification and any sort of identity theft. It is used to eradicate issues like inaccessibility, data insecurity and fraudulent identities which are most common in identity theft. According to Consensys, among the  45% of the people without identity, half of them belong to the weaker section of the society. Although, 60% of them do own a smartphone. Thus, there is an immense opportunity to use their smartphone behaviour and create an immutable, unique digital identity using blockchain technology for them. At PiChain, a larger part of our research contributes towards multiple different approaches of introducing the unbanked to the world of digital identity.

To understand how it works, we are providing below a little more detail into technology. While signing up for digital identity verifications, a pair of public and private keys is created. Public keys are stored in a chain which makes it immutable and protected against frauds. Additional data associated with the decentralized identifier can be stored on a chain too. However, complete data is never stored on the chain which ensures privacy and scalability. Each person or organization has its own pseudo-anonymous identifier or DID (Decentralized identifier). Each DID is secured by a private key which is controlled by the owner and thus, only they can prove or control their identity.

Acceptability of blockchain & digital identity

The U.N. and World Bank ID4D initiatives set a goal of providing every individual across countries with a legal identity by 2030. The European Union’s Electronic Identification and Signature (eIDAS) regulation came into force in July 2016, requiring mandatory cross border recognition of electronic I.D. by September 2018. With all these changes in place, digital identity is expected to bring about more mobility, national ID initiatives and an acceleration towards smart cities.

According to NEC, the identity and access management market is expected to grow from $8.09 billion in 2016 to $14.82 billion by 2021, representing a 12.9% CAGR. With everything going digital, starting from businesses to identity checks, it was predicted to have safe, verified and secured digital identity in the coming years. This closes the final loop of digitization and is bringing about the next wave of the digital revolution. 

Also, blockchain in digital identity management has multiple use cases, that ranges from self-sovereign identity to data portability. At PiChain, we believe safe and secured digital identity is going to be used in most of the future technologies to authenticate and authorise an individual to various systems across industries like BFSI, healthcare, education, travel, transportation and food tech.

Leveraging Emerging Tech to combat Financial Crimes

RegTech Podcast | Automated Compliance Management Process | Regulatory Technology

Leveraging Emerging Tech to combat Financial Crimes

With the world getting digitized so fast, it is the need of the hour to integrate emerging technology with the banking and finance industry, which otherwise majorly depends on manual work.

We are thankful to Anthony Muns from 8topod for having Shub, CEO of PiChain on their global podcast to discuss how regulatory technology is helping the banks & financial institutions to fight against financial crimes. RegTech firms are leading the way by assisting these institutions to combat illicit activities and fund transfers by leveraging emerging technology. 

PiChain is one of the RegTech firms with the mission to make compliance sustainable. It is working on integrating technology in various mundane but necessary jobs in compliance. It has developed a full-fledged On-boarding suite that includes VideoKYC, eKYC, AML Screening and E-Signatures approved by regulatory authorities. By using various technologies AI, Blockchain, it ensures real-time onboarding in less than 90 seconds. It assists Compliance and Regulatory Professionals to make better decisions by ensuring up to 93% reduction in False Positives.

The podcast discusses how RegTech firms like PiChain, are assisting to combat financial crimes using AML, AI, blockchain and digitized identification processes. 

As Shub said, the goal of PiChain is:

1) Increasing compliance confidence score

2) Reducing the cost of compliance

3) Repeating it YoY 

Along with the system in place, the firms need to update themselves with current happenings in the FinTech sector. Podcasts like 8topod engage with some of the thought leaders & innovators from various industries to understand the tactics, tools, and practices they are using to succeed. Anthony’s podcast helps many leaders & innovators to get the latest news, developments & trends within the finance and business spectrum. 

The podcast covers topics from Transaction Monitoring, Anti-money laundering (AML), Know Your Business (KYB) and Regulatory Reporting to FATCA and CRS.

Click below to listen to the interesting & insightful conversation on how PiChain is leveraging emerging technology to ensure sustainable compliance.

Transforming Customer Due Diligence using e-KYC

Customer Due Diligence | Automated Customer Onboarding Process | eKYC

Transforming Customer Due Diligence using e-KYC

What is due diligence?

 

 An effective KYC program has three parts; customer identification program, customer due diligence and ongoing monitoring. Although the first and third one is quite self-explanatory, Customer due diligence (CDD) involves a background check of the customer to analyze the risk they might bring about to the bank or financial institution. It is a part of the verification process to ensure that the said customer is actually revealing all of his/her assets. The user is verified against all of his/her creditworthiness and made sure that they are not a part of any money laundering fraud or in any prohibited lists or engaged with any terrorist-financing organization. When a bank acquires a customer and opens a bank account for them, they take over all the financial responsibilities of the customer which includes all the threats and risks he/she might possess. The KYC process, mostly used by banks and financial institutions to verify and authenticate the customer details while the opening of a bank account, assumes great importance to the banks.

 

Why enhanced due diligence (EDD)?

 

Even though due diligence performs all kinds of checks, it falls susceptible to identity theft. To surmount this issue, enhanced due diligence (EDD) was introduced. This provides an even higher level of scrutiny that due diligence could have provided. It runs an identity check on the customer along with other checks such as risk, address etc. This rules out the possibility of identity theft and decreases the risk factor before onboarding the customer. 

 

EDD is aimed at customers with high net worth and who take part in huge financial transactions on a daily basis. It provides detailed documentation and also separates the customers into different categories for investigating them differently. It takes more care in investigating political people and people of high social status because they possess more threats as compared to the common people. EDD also provides a detailed study of the customer’s background, assets, contacts, transactions etc to eliminate the possibility of any fraud motivation or connection. It not only gathers data but also verifies the source and credibility of the information and gives a “go” or “no-go” label to the customers. Based on this label, the bank or financial institution decides whether or not to onboard a customer. However, nowadays, the EDD process is combined with AML (Anti Money Laundering) schemes during the customer onboarding to enhance the security levels for the banks.

 

Why are banks using EDD?

 

Various banks and financial institutions are indeed investing in EDD. Apart from the additional security, there are multiple reasons as to why these institutions should invest in this process. The banks collect several details of their customers such as their employment status, age, credit limit, past purchases etc. which helps to understand their requirements and serve them better. This process also helps banks to identify black money or unaccounted assets that can damage their reputation because they obviously would not want to be associated with people having fraud motivation. Multi-level verification checks ensure that the customers have no illegal history and thus helps maintain a positive and legal atmosphere in the bank. And lastly but most importantly, using such secure methods like EDD shows that the bank is confident about the customers it onboards and this depicts a positive image in the market. The banks also need not have any worries after customer onboarding and can have a healthy relationship with each and every customer.

How is CDD having such a positive impact?

 

Businesses are getting digitized. Along with digitization, the number of cybercrimes is also increasing significantly. There were multiple policies to bring AML into practice. The cost of AML compliance across various financial firms was high, spending hefty amounts annually on KYC and CDD. This obviously was not very cost-effective and thus there was a need to curb the problem at its root. To address this obstruction, banks began implementing the CDD technique. If customers were verified against all frauds at the start of the onboarding process, banks would not have to incur additional anti-AML charges. The automation of  KYC, AML screening and CDD made the process almost 40% efficient as compared to the manual process. 

 

What next?

 

CDD is not the end of the verification process as banks need to keep a continuous check on their customers’ activities even after the onboarding. Banks need to monitor and flag any suspicious behaviour. This part of the CDD is known as transaction monitoring. With transaction monitoring, banks can monitor their customers’ behaviour over time and record the changes. They look out for suspicious transactions, buying of assets or even liquidation of shares. All these are put together in an algorithm assessing the credibility of the customer and check if they still can be considered safe enough to continue a business relationship with. Financial institutions keep track of their partners, customers and monitor audit trails of all user transactions using date and time stamp. Transaction monitoring is done by pinging databases of organizations like OFAC, HMT, UN and other government, defence etc to make sure their customers are not listed under any unlawful activities. If any unlawful activity occurs, the respected bank is alerted and they can take their course of action from there.

 

Due Diligence and future

 

After the introduction of the e-KYC process, all of the above mentioned due diligence is available to banks at the tips of their fingers, only a few clicks away. This ensures additional security to the banks and the data remains safe. Customers can trust banks and vice versa, thus, it promotes a healthy customer experience which in turn facilitates scalable customer onboarding.

Seamless Customer Onboarding using Digital KYC

Digital KYC | EKYC | Customer Onboarding Process | Automated Onboarding

Seamless Customer Onboarding using Digital KYC

With certain procedures changing as the world battles the pandemic, one very successful change is the introduction of Digital KYC. Not only does it keep up with the safety procedure, but also makes life a lot easier. As per the new amendments, industry body, NASSCOM said, “The move comes as a major relief for the fintech industry as no cost-effective, scalable and customer friendly alternative digital KYC method was available to them, until now.”  For the banking and financial sector, not just there was an increase in the number of customer onboarding using Digital KYC but also received a lot of positive reviews from the masses as it makes their life much easier.

Of the roughly 175 countries with some form of national ID system in place, 161 are digitized and 83 collect biometric data. This presses even more pressure on the banking and financial sector to move on from the traditional method to a more automated and technologically aided method. The World Bank defines digital ID as “a collection of electronically captured and stored identity attributes that uniquely describe a person within a given context and is used for electronic transactions. It provides remote assurance that the person is who they purport to be.”

 

What is Digital KYC/E-KYC?

KYC (Know Your Customer)  started out as a part of the USA Patriot Act. This act was made for the sole purpose of catching offenders and making laws against them more secured and to increase the safety of the nation and its citizens. It was least controversial and least opposed. It was done with the goal of making sure that banks could verify their customers and that there was no fraud whatsoever in their identity. This was one of the major steps taken against money laundering and thus was accepted by financial and banking sectors quite easily.

 

Digital KYC procedure

Digital KYC (Know Your Customer) is an advancement from the old method of KYC where people had to visit certain verified institutions to get their KYC done so as to take part in certain online money transactions and to verify the credibility of the customer. KYC is the process of using two-way video applications to get their photographs. It does so by taking a screenshot during the video call or the live call. It also uses live geotagging to confirm the location of the customer. This is a completely online procedure and needs only a valid phone number and any government-issued identity card. The KYC verification process is also foolproof and end to end encrypted.

 

Digital KYC solutions and E-KYC in banks

Traditionally finance and banking sectors have been collecting hard copies of birth certificate, address proof etc. This is not just time taking but also takes a lot of effort and manpower. There are also a lot of chances of human errors and misplacing of documents. There is a lot of money and time and space required to maintain these documents as well. Some major financial institutions spend up to $500 million annually on KYC and customer due diligence, according to Thomson Reuters. The Thomson Reuters survey also found that 12% of companies said they had changed banks as a result of KYC issues. If the number of customers at a bank doubled, KYC requirements could cause them to wait six to eight weeks to start using their accounts. Thus a digital KYC eliminates all these issues and makes work easier for both the management and the people. These make the banking sector enter a huge competition and digitization remains the only way for them to survive.71% of trade providers have stated inadequate KYC practices as key factors in driving trade finance rejection rates. The world is learning from India as its Aadhar program successfully digitized ID for more than 90% of the population of India. Majority of banks in India have been able to speed up the process of customer onboarding using Digital KYC.

 

How did it affect customer onboarding?

Needless to say, this comes as a boost to all the fintech and banking sectors around the country. It is also a huge economic boost as barely any hardware is required and it is also a time-saving process as multiple registrations can happen concurrently. Several banks have already started using E- KYC for onboarding savings account customers and promoting the same for credit card registration. The rate of onboarding new customers increased rapidly because they felt a lot less friction in the data collection process. 

 

Statistics of the client onboarding process

In a paper published by Groupe Spéciale Mobile Association (GSMA), it is mentioned “we examined two approaches to conducting customer identification, verification, and due diligence (collectively referred to as “know your customer” or KYC) that make it easier for financial service providers to take on new customers: tiered KYC and electronic KYC (e-KYC). Between the two, e-KYC is the more promising long-term approach, but also the more challenging to implement.” This is a fully paperless process and thus promotes environment-friendly schemes too.

Seeing that digital KYC has a vast scope in the future, multiple start-ups are coming up with the idea to make it more effective. One such company is PiChain. It is a real-time onboarding company which uses Machine learning and AI algorithms to increase the efficiency of their customer onboarding process. PiChain has also developed a full-fledged On-boarding suite that uses the AI, Machine Learning and Blockchain to its advantage to ensure real-time onboarding in less than 90 seconds, a 90% quicker turnaround time and whooping 75% reduction in Operation expenditure. The On-Boarding Suite includes VideoKYC, eKYC, AML Screening and E-Signature approved by regulatory authorities. The International Telecommunications Union (ITU) identifies 22 governments that allow third parties to access their digital ID systems for the purpose of conducting KYC. It also determines the documents that are needed by the client to complete the procedure. This process is integrated with Machine Learning and AI algorithms to make it more secure and easier to detect frauds.

Considering all of these together, as we march towards the new normal caused by the COVID-29 pandemic, all organizations are changing and exploring new ways to make their services more user friendly. In the midst of all these digital KYC comes out as a service that is here to stay and grow. 

eSign or Electronic Signature are Redefining the Era of Digital Signature

eSign or Electronic Signature | Digital Signature | DSC token | e-Sign Service Providers

eSign or Electronic Signature are Redefining the Era of Digital Signature

With the ongoing pandemic of Covid-19, concepts like social distancing, digital transformation have surfaced. Majority of the businesses are shifting from the conventional method to digitalization. No physical contact, paperless transactions are now becoming a reality that the people need to abide by. Amidst such occurrences, a new notion of digital signature or eSign has been prominently recognised. Some businesses have already implemented eSign or Electronic Signature. 

 

A wet signature is a legal consent given by a person thus, assumes a lot of significance. The KYC based eSign is legally equivalent to this wet signature. Like the wet signature, it also ensures non-repudiation and legal binding.

 

What is eSign?

 

eSign is an abbreviation for Electronic Signature. As technology evolves, new methods of signature are invented. The Legal definition for Esign:

 

“The term ‘electronic signature’ means an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” — Electronic Signatures in Global and National Commerce Act (ESIGN).

 

In layman’s words, eSign is digitally signing the document. A paperless method by which a person or business entity can enter into an electronic contract. The concept of Electronic Signature was introduced through The Information Technology Act, 2000 but since then no major heed was paid to it until now. In India, eSign has evolved in recent years which will soon be changing the face of online transactions. Being an alternative for wet signatures, we require certain documents in place to avail this service. For a document to be signed digitally, we need to possess a Digital Signature Certificate from the Central Authorities of the country.

 

One of the notable features of eSign is that it can be done anywhere, anytime without much hassle. It makes use of digital signature technology which is used to sign a said document. Like the wet signatures, eSign is legally binding and highly regulated. It is considered to be a valid identity of the proxies and becomes legally binding. 

 

What is a Digital Signature?

 

In order to authenticate and verify the validity of the digital document or message, a mathematical sequence is used which is called Digital Signature. It is an algorithm that the receiver of the digital document can use to check and verify if the document or message received by him/her is not modified and is in its original format. It makes use of Public Key Infrastructure (PKI) to provide both the entities with the highest level of security. PKI is a standard, universally accepted format that allows inter-country transactions digitally with minimized risk of false identity.

 

Even though Digital signature and electronic signature are used interchangeably but one must understand that they are two different fundamental concepts. An eSign or electronic signature is the image or representation of the original wet signature which can be in different formats or a combination of them. It can be the original signature, digital certificate or the biometric signature. While a digital signature is a mechanism behind eSign. It is used as a technology to authenticate the document validity. Also known as a digital certificate, it is the cryptography behind an electronic signature.

 

Both digital and electronic signature have one fact in common; they allow you to sign the documents and authenticate the signer. Both of the signatures differ on a various basis such as the technical implementation, legal acceptance, geographical use and the purpose. The digital technology used for eSign significantly varies between countries. The countries such as the United States, Canada, United Kingdom, Australia follow open, technology-neutral laws whereas countries in South America, Europe and Asia follow tiered eSign models where the digital signature technology is based on locally defined standards.

 

In India, every individual who has an Aadhaar number can do a wet signature equivalent to digital signature using Aadhaar eSign. 

 

What is Aadhaar eSign?

 

We know that Aadhaar has weighing importance for KYC verification which earlier was an irksome task but the eSign technology makes it more simple and nimble. It facilitates digitally signing of the document by an Aadhaar holder using the Aadhaar E-KYC services. This is an integrated service that issues a Digital Signature Certificate to perform the task e-signing the document. Since it uses the Aadhaar card to authenticate the signer, a person must have an Aadhaar card for availing eSign services. If you are a registered Aadhaar user, you can automatically use the eSign services with no prior paperwork. 

 

For instance, if two parties or entities wanting to enter an agreement, have a 12 digital Aadhaar number and registered Aadhaar mobile number, then it is possible for both of them to conveniently sign the document without being physically present. It is an initiative by the Indian Government to allow a person having an Aadhaar to instantaneously sign & verify a document anywhere, anytime; thus saving time and costs. Under the provisions of The Information Technology Act, eSign or Electronic Signature assumes equal value as a wet sign and is a recognized form of a signature that holds legal validity. 

 

The working of eSign

 

Though the process may seem simple to the end consumer, the mechanism behind such a highly regulated service is more sophisticated. The framework of the system is derived from Application Service Provider which creates an application interface when a user accesses the eSign services. ESP (eSign Service Provider), a government-approved entity is accessed by the user using the API. Once the connection between the user and the ESP is established, the user provides authentication of their identity using the data saved on their Aadhaar profile using fingerprints or an OTP verification code sent on the registered Aadhaar mobile number/registered Email ID.

 

Soon as the information provided by the user matched the KYC database saved by the Indian government; a certified, government-regulated authority issues a temporary Digital Signature Certificate. A PKI is generated and an audit trail with the authentication response is created. The ASP will then receive the signature from the ESP that is attached to the document and as the signature is fixed, the key gets destroyed automatically after one-time use.

 

Benefits of E Signature

 

Interwoven into the globalised world, eSign is welcomed by many countries due to its noteworthy benefits:

 

  • E Sign has brought relatively big effects by opening up more global trade opportunities.

  • The tedious task of being physically present for signing the document is no more required.

  • Lot of productive time is saved as the signing of documents can be done instantly.

  • Eliminating the cost of enormous paperwork, printing, scanning and travelling, eSign has been favoured by many people.

  • It is a legally recognised and valid document managed by licensed Certifying Authorities ensuring that there is no identity theft.

 

By now, most of the countries have adopted the digital signature technology and are improving their compliance regulations. The country and industry-specific regulations are evolving continuously, a prominent example is the regulation recently adopted by the European Union known as Electronic Identification and Trust Services (eIDAS) regulation.

 

In India, there are some exceptions where eSign is not applicable. Here are the classes of documents that cannot be eSigned:

 

  • A negotiable instrument as defined in section 13 of the Negotiable Instruments Act, 1881

  • A power-of-attorney as defined in section 1A of the Powers-of-Attorney Act, 1882

  • A trust as defined in section 3 of the Indian Trusts Act, 1882

  • A will as defined in clause (h) of section 2 of the Indian Succession Act, 1925 including any other testamentary disposition by whatever name called

  • Any contract for the sale or conveyance of immovable property or any interest in such property

  • Any such class of documents or transactions as may be notified by the Central Government in the Official Gazette

Video KYC: A Monumental Step towards Digitalization

Video KYC (Know Your Customer) | Digital KYC onboarding Process | VCIP onboarding

Video KYC or V-CIP: A Monumental Step towards Digitalization

A commonly heard term in the banking industry is KYC (Know Your Customer). KYC is the process or step in which there is an assessment of the customers’ profile. It evaluates the risk of the customers of a bank or financial institutions to ensure that they comply with the Anti-Money Laundering (AML) laws. 

 

With the emerging technologies like Artificial Intelligence (AI), UIDAI Biometrics, machine learning, face matching and recognition, the concept of Digital KYC took birth. E-KYC or Digital KYC was able to surpass the issues that the manual KYC process faced earlier but was still lacking in achieving complete digitalization. The prominent technology which is helping us to go fully digital is Video KYC.  

 

Background 

The KYC process is imperative for Regulated Entities (RE), yet past years haven’t proved to be beneficial to bring out novel developments in this field. But as complications began to arise, the process of identifying and authenticating customers is exposed to the risk of frauds and the great threat of money laundering. This has impelled some developments to tackle the ever-rising problems of REs.

 

With the recent amendment in The Prevention of Money Laundering Act (PMLA), the regulators allowed several modes of capturing customer details electronically. This led to various developments of technology across industries including the KYC process in banks. The regulators recognized the downside of the physical presence of the customer and sheer data handling in the KYC process even if it was for E-KYC. Though Digital KYC was used earlier, the KYC process was still cumbersome as the customers were required to provide the documents in the physical form. Earlier this year, intending to reduce the cost of customer acquisition, the errors in KYC documentation and adherence to the AML regulations, Reserve Bank of India (RBI) released an amendment on 9th January 2020, adding Video-based Customer Identification Process (VCIP) as another option for KYC verification in the financial community. As an impact of the Covid-19, in-person interaction has not remained a feasible option for verifying documents in the KYC process. Hence, Video KYC has become a viable option in the KYC process.

What is Video-KYC?

 

 Video KYC or VCIP is the process of digitally authenticating the customers and overcoming the difficulty of physically examining the documents. KYC verification involves checking all the documents submitted by the customers and the absence of the technology made it a tedious and daunting task for humans. The Video KYC has surmounted this hurdle, bringing efficiencies in the KYC process and reducing the expensive customer onboarding task. This proved to be mutually beneficial for the banks as well as customers. 

VCIP has gained a lot of attention majorly from the banking and financial institutions. They experienced an increase in productivity and speeding up the process due to minimal intervention of humans.

Video KYC leverages the video call technology in onboarding the customers via video KYC authentication which has proved to be the most significant development in the field of KYC. It is a simple, seamless and scalable process by which the institutions can acquire customer details and documents before onboarding them. This is a reliable system which uses AI-enabled technology that helps in the prevention of fraud and checking errors.  

Steps in Video-KYC Process

Video-KYC is the game-changer for the industry, cutting down the extensive time-consuming process of document examination from a few days to a couple of minutes. This involved the following, hassle-free steps to be performed by the customers – 

  • Registering and filling up the details on the online form on the website or mobile app of the Regulated entities (RE).

  • Consent to be obtained from the customers to fetch Aadhaar details, PAN number and other official documents to conduct E-verification. Meanwhile, allowing the bank to access the real-time location of the customer using geotagging software.

  • Scheduling a date and time for the customer onboarding process where banks send a link to the customers to the webpage for video call.

  • The bank official initiates the conversation by asking to display the documents on the video call. The software will grab the details from the documents and verify it with the uploaded documents. 

  • Using the facial recognition technology, the bank will verify the customer on the video call with the photograph on the documents.

  • The bank official will ask randomized questions as per the banks’ internal policy to ensure it a live interaction.

  • After assessing the answers, the bank official will decide whether the customer application should be approved or disapproved. Also, the video call interaction is stored by the official to ensure non-repudiation.

 

The technology used in Video-KYC is a robust, secured and encrypted to prevent data leak which, otherwise, might be a data privacy concern. Each and every step in Video-KYC is done in real-time using AI-enabled techniques of automated data extraction, machine learning and face matching. 

 The Benefits of Video KYC

  • This type of KYC verification process drastically reduces customer onboarding costs.

  • Streamlines the complex process through automation using Artificial Intelligence.

  • Helps to detect frauds and malicious activity and safeguards the investors.

  • Keep a check on criminal activities majorly money laundering

  • Cost-effective technology involving minimal paperwork

 

Video-KYC is monumental but just a mere step in the financial sector, furthermore, developing an impeccable experience in e-commerce, telecom and networking industry. 

This website uses cookies to ensure you get the best experience on our website. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close