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. 

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