A Complete Guide to understand the process of Video KYC?
May 06, 2021
During the COVID-19 pandemic, board meetings, family gatherings, new product releases, and other activities are taking place via video conferences. Banks are not far off in terms of implementing video network technologies to onboard new customers and complete the Know Your Customer (KYC) process. According to Reserve Bank of India (RBI) regulations, the KYC mechanism is required for comprehensive banking.
What exactly is KYC?
The KYC procedure is mostly conducted by banks. It is the mandatory process of identifying and verifying the client’s identity when opening an account. As per Reserve Bank of India (RBI) notification, from 2004, all banks should mandatorily complete the customer KYC process.
What distinguishes video KYC from regular KYC?
People may complete their KYC for financial transfers and other related activities in several ways. As previously mentioned, the RBI, SEBI, IRDA, and other regulatory bodies use the Know Your Customer (KYC) system to authenticate consumers. Video KYC is far better than regular KYC as it can be done from our home. It is time-efficient. It just takes 5 minutes to complete a video KYC.
The process of video KYC
The RBI approved the use of the Video-based Customer Identification Method (V-CIP) for achieving paperless KYC. Individuals can do remote KYC via video call from the comfort of their home. Unlike conventional methods, the banker verifies the records, performs a liveliness search, and determines the person’s location through video call.
Video KYC Guide: Regulatory Requirements
- A live video of the customer.
- Offline Aadhaar Verification.
- Customer’s original PAN card.
- PAN card verification from database.
- Geo-tagging to ensure the customer is in India.
- A photograph of the customer would be compared to the government IDs.
- Video to be encrypted with the date and time stamp.
Process of Video KYC:
- A customer has to visit the bank’s website and schedule a video KYC.
- The customer will get an automatic text message or email containing a joining link.
- He or she has to join a video call with a bank representative.
- The bank official will do OSV verification of the consumer’s original government documents.
- Customer address validation will be done using his or her live location.
- After successful Video KYC, the consumer will be notified via email and text message.
Advantages of the video KYC process
Several banks and lending agencies have begun to introduce recommendations for a successful video KYC procedure. The video KYC mechanism can be used for various items, including remote onboarding of savings account customers or net banking customers. A large number of non-banking lenders are now in the process of putting the system in place.
- Video KYC enables real-time customer verification through facial recognition and automatic data retrieval.
- Artificial Intelligence is used to quickly onboard clients.
- Onboarding expenses are reduced by 90%. Video KYC significantly reduces the time taken for client onboarding.
- It significantly reduces paperwork. That will also aid in the elimination of human errors.
- It saves a lot of time because it can be completed at any time and from any place. The customer’s physical appearance is not needed. He or she just needs a smart device with a camera and a stable internet connection.
- It will also enable businesses to use the same KYC for various items, such as opening bank accounts and loan applications.
What are the benefits of the video KYC process in different business verticals?
Private and government Banks
You may have come across a KYC form. You need to complete the KYC process for getting full account access. Without KYC, the customer won’t be getting full benefits, and some banks won’t allow opening an account. These procedures are a legal necessity for banks to discourage money laundering and identity theft. A Video KYC system not only allows customers to complete their KYC at a convenient time and place but also simplifies and speeds up the process.
NBFCs & MFIs
The video-based customer identity process is making hassle-free banking a possibility for the fintech industry. It allows institutions to perform remote onboarding. It also reduces the time taken for customer onboarding. Furthermore, in the present pandemic situation, video KYC eradicates physical contact, reducing the chances of virus transmission.
Video-based KYC is the safest and most effective method of authentication as it does not require any human intervention. It is solely based on technology, and it assists fintech firms in lowering costs and enhancing performances. Even during the pandemic situation, a video KYC facility allows consumers and lenders to establish new banking relationships easily and securely, with no physical contact.