Today’s customers demand a hassle-free onboarding process with the least dependence on support calls from all businesses they interact with. According to a recent survey by Q2 and cornerstone advisors, 43% of the customers would adopt FinTech solutions due to their easy account setup processes. But ensuring a fraud-free, instant and transparent Know Your Customer (KYC) onboarding process needs technology and regulatory infrastructure.
Traditional KYC is a document-intensive, highly redundant and non-scalable process. Equally cumbersome for both the customer and the conducting organization, it can become a smokescreen for money laundering cases. Understanding the limitations of this process, the Finance Ministry came up with amendments in the Prevention of Money-laundering Act (PMLA), 2002, to ease the KYC norms for the banking and Telecom industry. With the introduction of new set of KYC guidelines, the ministry has simplified the process of capturing customer details, a step bound to aid other industries too, where KYC is a mandatory onboarding step.
The government has instituted Aadhar eKYC, digitally signed electronic documents on Digilocker and digital KYC as the extensions to the existing processes for a paperless onboarding. However, home to the 2nd largest unbanked population in the world, India still needs to relook at its remote lending infrastructure, where KYC forms are an important part of the client onboarding experience, with a dedicated focus. Sticking to physical document collection for verification not only reduces efficiency but increases the chances of fraud and manual errors.
With the evolution of internet services in the country and mobile banking receiving a huge boost, there’s some movement in the direction of Digital KYC. Digital KYC requires an agent to capture the details of the customer, along with geotagged photos, and OTP based authentication. Though not truly there yet, the government has addressed some gap for the industry players in terms of cost and process standardization. Paperless and Presence less video-based KYC has been successfully introduced in mutual funds industry as per the SEBI guidelines. How long it might take to create similar PoCs for other industries is still to be seen.
The major challenge for the organizations will be to ensure compliance and safety of the consumer, especially from synthetic and identity frauds largely prevalent in the industry.
AuthBridge’s digital KYC services include image and video-based KYC that can help businesses and individuals in authenticating customers in real-time, along with solving some other major pain points in the process. Our OCR and face recognition technologies can help in creating use cases for liveness detection, age and identity verification, in-turn streamlining account opening and compliance processes.
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