Video KYC Process or VCIP Solution: 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 associated with the customers of a bank or financial institution. This process ensures that they comply with the Anti-Money Laundering (AML) laws. With emerging technologies like AI, UIDAI Biometrics, machine learning, facial recognition, the concept of Digital KYC took birth. EKYC or Digital KYC verification was able to surpass the issues that the manual KYC process faced earlier. But this method is still lacking complete digitalization. The prominent technology which is helping us to go fully digital is Video KYC verification. This brought a sudden rise in firms offering video KYC solution or VCIP solution for banks.
Though the KYC process is imperative for Regulated Entities, 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 got exposed to the risk of frauds. It came under the great threat of money laundering. This has impelled some developments like the video verification process 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 EKYC. Digital KYC solution is also known as video KYC verification process. It existed before and is not new. But still, customers find the video KYC bank account opening process cumbersome because they even require to provide the documents in the physical form.
Earlier this year, the Reserve Bank of India (RBI) released an amendment on 9th January 2020 for Video KYC. It added Video based Customer Identification Process (VCIP solution) as another option for KYC verification in the financial community. By this, it intends to reduce the cost of customer acquisition, the errors in KYC documentation and adherence to the AML regulations. Due to COVID-19, in-person interaction has not remained a feasible option. It is no more viable way for verifying documents in the KYC process. Hence, the Video KYC process has become a viable option in background verification.
What is Video KYC?
Video KYC (VCIP) or video verification is the process of digitally authenticating the customers. It overcomes the difficulty of physically examining the documents. KYC verification involves checking all the documents submitted by the customers. And in the absence of technology, it was a tedious and daunting task for humans. The Video KYC solution has surmounted such a huge hurdle. It has brought efficiencies by reducing the expensive customer onboarding cost in the KYC process. This proved to be mutually beneficial for the banks as well as customers.
VCIP solution or digital KYC verification has gained a lot of attention majorly from banking and financial institutions. They experienced an increase in productivity due to minimal human interventions. It also helped in speeding up the authentication process.
The Video KYC process leverages the video call technology in onboarding the customers. This video KYC verification and authentication process has proved to be the most significant development in the field of KYC. It is a simple, seamless and scalable way by which the institutions can acquire customer details and documents before onboarding. It is a reliable system with AI-enabled technology to prevent frauds and check errors.
Steps in Video KYC Process
Video KYC verification is the game-changer for the industry. It has cut 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 for 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 them 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 Benefits of Video KYC
This type of Digital KYC solution drastically reduces customer onboarding costs.
Video Verification services streamline the complex process through automation using Artificial Intelligence.
Video KYC solution helps to detect frauds and malicious activity and safeguards the investors.
Adoption Digital KYC can help keep a check on criminal activities majorly money laundering
VCIP solution utilizes cost-effective technology involving minimal paperwork
The technology used in Video KYC verification or VCIP solution is robust, secured and encrypted. It ensures the prevention of data leak which, otherwise, might be a data privacy concern. Each and every step in digital KYC verification is done in real-time. This process uses AI-enabled techniques of automated data extraction, machine learning and face matching.
Video KYC is monumental but just a mere step in the financial sector. Furthermore, developing impeccable experience in the e-commerce, telecom and networking industry.