The Covid-19 Pandemic has brought a significant transition in the business world, with digitisation at the forefront. Most businesses have converted their physical operations to online to offer better customer service, saving money and human resources. Banking and financial firms have fast-tracked the customer onboarding process through digitisation among industries and services. The major challenge for firms is to create a balance between security and customer experience. Video KYC verification is one such advancement in KYC processing that offers real-time onboarding and adapts to changing regulatory landscapes. Let’s learn how Video KYC verification is different from traditional KYC.
What is Video KYC Verification?
It is an online process of face-to-face identity verification carried out by organisations for customer onboarding using VCIP (Video-Based Customer Identification Process). The KYC agent executes the process through a video call to the customer and asks to submit the KYC documents digitally as proof of identification.
Difference between Video KYC verification and Traditional KYC
Know Your Customer, or simply KYC, is a process that will help the businesses or services ensure a customer’s identity and detect possible risks attached to that customer. Compliance with KYC or AML (Anti-money laundering) regulations is mandatory for banks and other lending institutions which deal with monetary transactions. Generally, organisations use a traditional KYC system or manual customer identification program (CIP) for customer identification during the onboarding process. This method will take weeks to complete, which will consume a lot of resources and time for both the firm and the customer that is not ideal. It may lead the customer to either abandon the process in the middle or delay processing the request.
VCIP (Video-Based Customer Identification Process) is the advanced version of the traditional KYC verification method, which is more secure, fast, and cost-effective. Video KYC verification eliminates the need for paperwork leading to swifter processing with real-time results. The onboarding customer need not be physically present to submit their identity proof documents to activate their services. From registration to onboarding, the complete process is carried out remotely. The significant differences are listed below.
|Video KYC verification||Traditional KYC|
|Verification is done in real-time||It May take many days|
|Online submission of identity proof documents||The client needs to make a personal visit to the company|
|AI-powered processing||Manual verification|
|Errors are non-existent||Chances of human error are high|
|Digital trail available and hence easy to track||Hard to keep a track|
Video KYC verification in India
There are different requirements for Video KYC verification in different countries. The central banking authorities provide the guidelines for customer onboarding and identification. These are mainly issued for adhering to AML (Anti-money laundering) regulations to protect the financial institutions from fraud and other issues.
In 2020, RBI issued guidelines for carrying out VCIP (Video-Based Customer Identification Process). Due to the Covid-19 pandemic creating a lot of restrictions like social distancing, barring entry to neighbouring states if the case count is high, etc. It has prompted RBI to amend KYC rules allowing banks and other lending institutions to use the latest technology for the Customer Identification Process (CIP).
SEBI (Securities and Exchange Board of India) in April 2020 allowed organisations to use VCIP (Video-Based Customer Identification Process) for KYC processing. The SEBI requirements for performing Video KYC verification are,
- The process is initiated by an authorised Registered Intermediary (RI) officer after the consent is obtained from the user.
- The online environment should be free from any interruption, and the user must be perfectly visible on the camera.
- The process should include random Q and A to ensure a live recording.
- During the video call, the user must show their signature, valid documents, and the KYC form. It must be authenticated using OTP.
- The verification expert must ensure the Aadhar card photo matches the customer by conducting various tests.
- After the process is completed, the videos must be kept safe and secure with exact timestamps.
Checklist for best Video KYC Verification Solutions
Before choosing to install Video KYC Verification Solution, background research has to be carried out with respect to features and functionalities. The checklist to be followed for the selection of VCIP (Video-Based Customer Identification Process) are,
- Global coverage: Customers may be staying in any part of the world and seek your service. Hence, ensure the VCIP technology has global coverage with proper document and language support.
- Cost-effective: The best VCIP solution is one that is affordable and equipped with high-quality features and functioning simultaneously.
- Customized solution: Every organization has different KPIs and business requirements, and hence the VCIP solution must be flexible and offer customized features based on the needs.
- Enterprise-grade security: Video KYC Verification Solution opted must have a high-end encryption system to prevent data theft and maintain customers’ privacy.
Video KYC verification has numerous benefits and will eclipse the traditional KYC in the coming years. Many businesses and banking services are adapting to this new-age solution, and users are embracing it wholeheartedly as it provides real-time results reducing the processing time considerably. VCIP technology is here to stay and will provide the necessary boost for Businesses to improve the user experience.