In a welcome move, the RBI has recently permitted using Video KYC as a means of remote customer verification in the banking and financial services sector. After Aadhaar enabled e-KYC was discontinued by the Supreme Court from being used for establishing the identity of customers, the financial services sector, especially the NBFCs, the PPIs and small fintech companies running on shoe-string budgets found it difficult to expand their reach. The non-banking firms which aimed to reach rural India’s unbanked population were also in a state of flux, with physical KYC as the only means of establishing a customer’s identity. Even the relatively convenient wallet companies could conduct KYC only for accounts to a limit of INR 10000. As rising customer acquisition costs and compliance pressures from the debt and banking regulatory watchdog burnt a huge hole in their pockets, the industry players vigorously pushed for digital ways of doing KYC to over-ride the manual processes which are time-consuming and inefficient.
This new move by the RBI will give a huge push to the neo-banks that rely on digital channels for servicing customers. The V-CIP (video-based customer identification process) combined with the AADHAAR based offline KYC mechanism will create a seamless, paperless, presence-less and cost-effective solution for KYC that will benefit industry players as well as customers who have also suffered due to long, inefficient and hassling KYC processes in the past. The financial services segment, including lenders and payment companies, targeting rural unbanked segments are also expected to see better market penetration by reaching their prospective customers easily. This solution will be especially attractive to tech-loving millennials and Gen-X who have come to expect the world on their fingertips.
Also read: KYC –Simplifying KYC for a digital India.
Compliance to the new RBI guidelines could still be a challenge
Video KYC or Paperless KYC is an alternative to physical and digital KYC and can be done with the consent of the customer. The onus of maintaining the processes’ integrity, however, solely lies on the regulatory entities (REs). Training the RE agents will be a key challenge to conduct this exercise. Activity logs with the credentials of the official or business correspondent performing the video-KYC must also be maintained as directed by the RBI. Also, the KYC can be rendered complete only after a concurrent audit of the account. The audio-visual interaction for liveness detection must be conducted by the bank and not by any third-party service provider.
AuthBridge can get you game ready. Our Video KYC capabilities can empower clients to create a seamless onboarding for their customers, ensuring an RBI-compliant V-CIP. Our Video KYC comes with the following benefits:
1. Guard against location spoofing: The videos are geotagged with the exact location to ensure that the individual whose KYC is conducted is in India
2. End-to-end encrypted videos: The video recording is encrypted end-to-end and stored securely on the cloud, with the date and time stamping of the recording to ensure easy retrieval of videos for robust auditing as and when required
3. High-quality images captured: Our OCR and image processing algorithms will ensure that the images captured by the RE agents are of high quality for easy information parsing and verification
4. Facial recognition: Our face-matching algorithms built on advanced AI/ML will ensure that the person recording the video is the same person who has furnished the details, creating a fool-proof system against fudged identities
5. Liveness detection: Random set of actions like head movements and interactions while video recording will ensure that no pre-recorded videos are being used during the V-CIP processes
AuthBridge’s end-to-end onboarding solutions coupled with Video KYC will help to smoothen the customer identification processes and create a seamless end-to-end journey for customers.
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