Gone are the days when customer identification and verification used to happen through physical documentation, such as a passport or driving license. The offline process not only used to be time-consuming but also prone to errors.
As soon as FinTech innovation gained global traction, the expectations of seamless digital experiences skyrocketed and the shift got reflected in financial services and beyond. eKYC solutions emerged as a way to streamline and automate the customer verification process for financial institutions and other regulated entities, using technologies such as biometric authentication, facial recognition, and AI-based algorithms.
What is eKYC?
e-KYC, also known as Electronic Know Your Customer, is a digital process of verifying the identity of an individual or an organization remotely. It is a paperless process that eliminates the need for physical documents and face-to-face interaction between the customer and the service provider.
eKYC has become increasingly popular due to its speed, efficiency, and accuracy. It has also enabled financial institutions to onboard new customers faster and more cost-effectively, while still maintaining compliance with regulatory requirements.
The e-KYC process involves the use of electronic documents and digital signatures to verify the identity of the customer. The customer is required to provide their details such as name, address, date of birth, and other relevant information to the service provider. The service provider then verifies the customer’s details using various electronic databases and verification tools.
The e-KYC process typically involves the following steps:
- The customer provides their details and other relevant information through a digital platform or mobile application.
- The identity of the customer is verified by comparing the provided information with various electronic databases and verification tools.
- Once the identity is approved, a digital identity certificate or other relevant documents is issued to the customer.
e-KYC process is fast, efficient, and commonly used in various industries such as banking, telecommunications, and insurance, to comply with regulatory requirements and ensure the security of customer data.
Importance of e-KYC
- Time and cost-saving: e-KYC eliminates the need for physical documents, which means it saves time and reduces the cost associated with paper-based KYC processes. There is no need for physical visits to customer service centers, which is a significant advantage for customers who are located in remote areas.
- Enhanced customer experience: With e-KYC, customers can complete the verification process from the comfort of their homes or offices. Also, the process is quicker and more convenient, leading to enhanced customer experience and increased customer satisfaction.
- Increased security: e-KYC uses advanced technology such as biometrics and digital signatures to verify the identity of individuals or businesses, which makes the process more secure than traditional paper-based KYC processes, also reducing the risk of identity theft and fraud.
- Regulatory compliance: e-KYC helps businesses comply with regulations related to customer due diligence, anti-money laundering (AML), and counter-terrorism financing (CTF). It also helps businesses to monitor and manage risks associated with their customers and their transactions.
Different Types of e-KYC
There are multiple methods to avail of e-KYC. These are as follows:
For OTP-based eKYC, customers are required to first register their mobile number. This e-KYC process is initiated online using the one-time password (OTP) sent to the mobile number linked to the Aadhaar card of the customer. Customers are required to click on the ‘Generate OTP’ option and enter the OTP to authenticate their identity and complete the e-KYC process.
Online e-KYC Aadhaar Biometric Authentication
Another way to conduct eKYC is via Aadhaar biometric verification which is done electronically using customer biometrics. In this authentication, a picture of the customer’s fingerprints and retina is taken through a scanner and sent to UIDAI to match the biometric readings kept with the customer’s Aadhaar number. Once the information is validated, UIDAI sends the customer’s identifying information to the verification service provider safely for further verification.
Offline Aadhaar Paperless e-KYC via XML or QR Code
The offline Aadhaar e-KYC process involves the sharing of identity data via XML or QR code.
- Aadhar XML
Customers can share the Aadhaar offline XML document with the financial institution by downloading it from the UIDAI website. For this, customers must first complete the offline eKYC form and save the XML file from UIDAI.
The report is encrypted and does not disclose sensitive information that is not pertinent to the KYC verification agency
- QR Code
Alternatively, customers can also share the QR code available on their Aadhaar card that can be scanned to assess the required information.
Eligibility Criteria for e-KYC
These are general eligibility criteria and specific requirements that may vary depending on the country, regulatory norms, and the business conducting the e-KYC process. However, some common eligibility criteria for e-KYC include:
- The customer should have a valid mobile number linked to their Aadhaar or other government-issued identification document.
- The customer’s identification document should be in a machine-readable format, such as a QR code or barcode, to enable the scanning of the document through the e-KYC application.
- The customer’s identification document should be issued by a government agency and should be valid and not expired.
- The customer should be physically present in the country where the e-KYC process is being conducted.
- The customer should consent to the collection, storage, and use of their personal information for the e-KYC process.
Also Read: Types of KYC | Process, Documents, and APIs
Documents Required for e-KYC
e-KYC refers to the digital verification of data that is already accessible in the Aadhaar database. Therefore, customers are not required to provide additional documents along with their application form. However, in the case of online e-KYC biometric verification, you may have to submit your passport-sized photographs while authenticating your biometrics.
KYC Solutions with AuthBridge
AuthBridge, being an authorized Authentication User Agency (AUA) with UIDAI, offers reliable KYC solutions through advanced APIs. With the help of our tech-enabled platforms and authentic data, we enable the industry’s fastest onboarding and verification in real time. We provide both conventional and cutting-edge KYC solutions i.e. Digital KYC and Video KYC, assisting businesses in rapidly and easily onboarding consumers while reducing risks.
Key benefits of using APIs and KYC solutions
- Background Verification without human intervention
- Real-time results
- Saves money, time, and effort
- No risks of errors that stem from manual entries which also helps avoid legal
- Complications
- Complaint and secure
Also read: Smart and Intelligent KYC Solutions: The Need of the Hour for Employers
For more information, contact us at sales@authbridge.com
