eKYC Process

Overview

In light of the acc?ssibility of financial goods and s?rvic?s on digital platforms, it becomes imperative for verification procedures to follow suit. R?c?nt legislation has enabled financial institutions to conduct th? onboarding proc?ss onlin?. The utilisation of the eKYC process makes it possible to ?xp?dit? th? proc?ssing of financial transactions by leveraging ?l?ctronic verification methods. It replaces traditional manual procedures such as physical docum?nt submission and in-p?rson identity v?rification.

By opting for the eKYC process online, you can provide the requisite information and auth?nticat? your identity digitally, eliminating the need for tedious paperwork and physical visits. This efficient approach not only saves time but also enhances convenience. As financial s?rvic?s increasingly transition to th? digital r?alm, eKYC s?rv?s as a vital tool for financial institutions to ensure safe, s?cur? and efficient customer onboarding and subsequent transactions.

Read on to understand what eKYC is, its procedure and various other aspects associated with the process.

What is eKYC?

Let's go into the eKYC meaning first. eKYC or Electronic Know Your Customer is a digital technique for remotely confirming an individual's or organisation's identification. A digitised version of the 'Know Your Customer' protocol, eKYC is a paperless process of electronically verifying the customer's credentials that assesses a customer's identity and address electronically, eliminating the necessity for physical documentation and face-to-face contact between you and the financial institution.

Thanks to its fast pace, correctness and efficiency, the eKYC process has grown in popularity. It has also allowed financial institutions to enrol new consumers more quickly and cost-effectively while adhering to regulatory regulations.

To validate the customer's identity, the eKYC process online uses electronic procedures and digital signatures. You must provide the service provider with your name, date of birth, address, and other information. The financial institution subsequently verifies your information utilising different electronic databases and verification technologies.

The Perks of the eKYC Process

Now that you know what eKYC means, let's take a look at the primary advantages of the eKYC process:

• Cost-Effective

Under the typical or standard KYC protocol, the financial institution incurs considerable inventory and labour expenditures. It engages staff to check your information to ensure that every detail is correct and complete. But using the eKYC process online saves money and time for both parties concerned. You can perform ?KYC with just a few clicks of your mouse.

• Convenient

The eKYC process has significantly simplifi?d the ?stablishm?nt of d?mat accounts and bank accounts for both financial institutions and individuals. This streamlined procedure has made verification of identity and vetting of documentation an easy and smooth process. Mor?ov?r, th? us? of encrypted servers in the eKYC process online ensures a higher level of security, minimising th? risk of fraudul?nt activity.

As a result, individuals and organisations can ?njoy th? benefits of efficient and secure account setup, r?ducing pap?rwork and saving tim? and money whil? maintaining th? int?grity of th? syst?m.

• No Paperwork

KYC is the first requirement a bank has when you apply for a loan for your business or even open a bank account. Although the eKYC process is easy and simple, you must visit the bank's website to submit information and papers. By enabling you to submit documents online, FlexiLoans, an Indian fintech company that provides loans and loan-related services to small and medium-sized enterprises/businesses (SMEs), renders a useful service by making the whole eKYC process paperless, safer and more convenient.

• Fraud Avoidance

It is impossible to deny that banks often have to cope with revenue losses caused by fraudulent activities. They have a hard time dealing with criminal activity caused due to their outdated systems. According to a recent study by the Reserve Bank of India (RBI), domestic commercial banks lost Rs. 1.85 trillion in fraud during the fiscal year 2019-20. With the online eKYC process, this figure decreased by 25% between 2020 and 2021.

• Secure and Safe

The eKYC process offers a vital advantage of comprehensive security. In traditional banking, anyone at th? bank could acc?ss your personal data stor?d in physical documents. How?v?r, ?KYC ensures safety by pr?v?nting data sharing or tamp?ring. Additionally, the eKYC process ?liminat?s th? risk of loss or damage to essential pap?rs sinc? ?v?rything is stor?d digitally.

This efficient and secure system protects your financial information and provides you with peace of mind. With the eKYC process online, you can trust that your data is saf?guard?d, making it a r?liabl? and convenient option for account s?tup and management.

• Improved Client Experience

The eKYC process offers you the convenience of completing the verification process from the comfort of your home or office. This ?liminat?s th? n??d for physical visits and allows you to go through th? proc?ss at your pac?. Not only is the eKYC process faster than traditional m?thods, but it also provides a more comfortable ?xp?ri?nc? for customers.

The streamlined and us?r-friendly natur? of th? ?l?ctronic proc?ss ?nhanc?s ov?rall custom?r satisfaction and contributes to a positiv? ?xp?ri?nc?. By l?v?raging technology to facilitat? r?mot? v?rification, businesses can provide their customers with a s?aml?ss and hassle-free onboarding process.

• Extremely Quick

Compared to traditional KYC proc?ss?s that r?quir? physical visits to branch?s for pap?r submission, the online eKYC process provides a significantly fast?r alternative. It enables fulfilment of all r?quir?m?nts onlin₹, ?liminating th? n??d for in-p?rson visits. This digital approach drastically r?duc?s proc?ssing tim₹, making the eKYC process consid?rably quick?r than its traditional count?rpart.

The sp??d and convenience offered by ?KYC contribute to a more cost and time-effective custom?r v?rification process in today's digital ag?.

• Automated Process

The eKYC process is an entirely automat?d system that eliminates th? n??d for human intervention in transmitting KYC data instantly. Unlike the traditional paper-based m?thod, which often consumes days or even weeks, the online eKYC process is remarkably efficient, taking only a few minutes to compl?t?.

With the elimination of manual data entry and the seamless integration of electronic systems, the ?KYC verification process revolutionises customer onboarding, simplifies compliance procedures and contributes to a more efficient and modernised business environment.

• Helps in Market Penetration

The Unique Identification Authority of India (UIDAI) databas? stor?s th? information of ov?r 1 billion Aadhaar card hold?rs in India. Businesses no longer need to spend enormous sums on verification since eKYC is immediately connected with this database.

Thanks to the eKYC process online, financial institutions can instantly v?rify customers who have an Aadhaar with minimum apparatus on their side. As a result, firms can utilise this convenient process to grow into new areas more cost-effectively. eKYC can also help attract more clients into the formal financial sector by allowing them to open their accounts quickly, obtain loans, insurance, and avail of various other financial products.

Documentation Needed for the eKYC Process

You can participate in ?KYC without the need for physical documents. By selecting eKYC, the applicant grants the service provider access to the electronic version of their data, which includes their name, gender, contact information, address, date of birth, and other personal information. As a result, you will not need extensive documentation to support your credentials.

If you are completing the eKYC for a firm registered with the Securities and Exchange Board of India (SEBI), you must submit your Aadhaar number and upload a digital copy of your Aadhaar card. The site will list other necessary papers and only acc?pt digital v?rsions. You must keep the following documents ready when performing the eKYC process:

• Passport-size photographs
• Aadhaar card
• PAN card.

What are the Types of eKYC?

As mentioned, the UIDAI database currently contains many identifying characteristics. Service providers obtain this information and use it to validate consumer credentials when performing the eKYC process. You need to provide them with your permission to validate your personal data.

Here is a list of the various forms of ?KYC:

1. Online Methods

There are mainly two types of online eKYC processes:

• Biometric Identification

Here, a scanner acquires fingerprints or a retina picture. These are sent to UIDAI and compared to the biometric data recorded under the customer's unique Aadhaar number. After confirming th? match, UIDAI securely transmits the data to th? financial institution, which proceeds to auth?nticat? it. This completes the biometric-based Aadhaar eKYC process.

• One-Time Password (OTP) Authentication

You must register your cellphone number for OTP-based Aadhaar authentication. You should provide your consent to the eKYC process and generate an OTP, which is sent to your Aadhaar-registered cellphone number. Wh?n you ?nt?r this password, th? syst?m confirms your Aadhaar and th? information is s?nt to th? s?rvic? provid?r for v?rification. This completes the OTP-based Aadhaar eKYC process.

2. Offline Methods

Here are two offline methods for the eKYC process:

• XML File

The offline eKYC process can utilise an XML file. To receive your XML file, visit the UIDAI website and complete the offline KYC form. This file will include demographic information such as your name, date of birth, gender, address, and more. Service providers may read the Aadhaar XML file, which extracts the validating information necessary for the eKYC process.

• QR Code

If you have an Aadhaar card, you've probably seen a QR code on it. This QR code is unique and machine-readable, and contains the necessary demographic information required to compl?t? the eKYC process and can be read by code scanners to ?xtract th? data, which is th?n utilis?d for Aadhaar auth?ntication.

The Steps Involved in the eKYC Process

To avail of any s?rvic? that r?quir?s KYC v?rification, such as op?ning a bank account, inv?sting in mutual funds, applying for a loan, or buying insuranc₹, you can opt for ?KYC using your Aadhaar numb?r. You can complete the eKYC process quickly and ?asily by following these steps:

1. Visit th? official w?bsit? or app of th? s?rvic? provid?r and s?l?ct th? option '?-KYC using Aadhaar'.
2. Ent?r your Aadhaar numb?r and cons?nt to share your KYC data with th? s?rvic? provid?r.
3. You will r?c?iv? an OTP on your r?gist?r?d mobile number or email address, and you need to ?nt?r it on th? w?bsit? or the mobile app to verify your identity.
4. The financial institution then obtains your KYC data from UIDAI through a secure channel and verifies it with its records.
5. The institution may also ask you to upload a self-attested copy of the ?-Aadhaar or perform a face verification using their w?bcam or smartphone camera.
6. Th? s?rvic? provid?r will then complete th? ?KYC v?rification and confirm th? activation of th? s?rvic?.
7. You will r?c?iv? a confirmation m?ssag? or email from th? s?rvic? provider with th? d?tails of th? account or policy.
8. You can access the account or policy online using your login credentials or OTP.
9. You can also download your ?KYC docum?nt from UIDAI's r?sid?nt portal (https://r?sid?nt.uidai.gov.in) for future r?f?r?nc?.
10. Lastly, you can updat? your KYC data onlin? through UIDAI's portal or app wh?n?v?r th?r? is a change in your personal information.

Eligibility Criteria for the eKYC ProceThe Steps Involved in the eKYC Process

To avail of any s?rvic? that r?quir?s KYC v?rification, such as op?ning a bank account, inv?sting in mutual funds, applying for a loan, or buying insuranc₹, you can opt for ?KYC using your Aadhaar numb?r. You can complete the eKYC process quickly and ?asily by following these steps:

1. Visit th? official w?bsit? or app of th? s?rvic? provid?r and s?l?ct th? option '?-KYC using Aadhaar'.
2. Ent?r your Aadhaar numb?r and cons?nt to share your KYC data with th? s?rvic? provid?r.
3. You will r?c?iv? an OTP on your r?gist?r?d mobile number or email address, and you need to ?nt?r it on th? w?bsit? or the mobile app to verify your identity.
4. The financial institution then obtains your KYC data from UIDAI through a secure channel and verifies it with its records.
5. The institution may also ask you to upload a self-attested copy of the ?-Aadhaar or perform a face verification using their w?bcam or smartphone camera.
6. Th? s?rvic? provid?r will then complete th? ?KYC v?rification and confirm th? activation of th? s?rvic?.
7. You will r?c?iv? a confirmation m?ssag? or email from th? s?rvic? provider with th? d?tails of th? account or policy.
8. You can access the account or policy online using your login credentials or OTP.
9. You can also download your ?KYC docum?nt from UIDAI's r?sid?nt portal (https://r?sid?nt.uidai.gov.in) for future r?f?r?nc?.
10. Lastly, you can updat? your KYC data onlin? through UIDAI's portal or app wh?n?v?r th?r? is a change in your personal information.

• The eligibility requirements for the online eKYC process in India include a r?gist?r?d Aadhaar card and an accompanying mobil? numb?r. Th?s? requirements enable saf? communication and authentication throughout th? v?rification proc?ss. Furth?rmor₹, the Indian government has made Aadhaar ?nrollm?nt op?n to all p?rsons, allowing any Indian citiz?n to g?t an Aadhaar card, thus facilitating eKYC access.
• To ?ngag? in the eKYC process, you must agree to share your KYC information with th? s?rvic? provid?r through Aadhaar auth?ntication. This authorisation shows that you are aware of and provide consent to exchanging personal information for verification purposes.
• Depending on th? service provider's rules, you may need to produce a self-att?st?d copy of your ?-Aadhaar card. This card is a digital version of the Aadhaar card that is available on th? UIDAI w?bsit? and s?rv?s as a m?thod of docum?nt v?rification, assisting in confirming the accuracy of the information supplied.
• In some instances, th? s?rvic? provid?r may r?qu?st you to do a fac? v?rification. The online eKYC process may require a live video or selfie to v?rify th? auth?nticity of your Aadhaar card. Fac? verification adds an extra layer of security and helps prevent identity th?ft and fraudulent activities.

How Do You Check the Status of Your eKYC Process?

You can verify your eKYC status by going to the KYC Registration Agency (KRA) website and completing the steps outlined below:

• Step 1: Go to the official (CDSL) website.
• Step 2: Click on the 'Inquire Your KYC' tab.
• Step 3: Enter your credentials such as your Aadhaar card, numb?r or PAN card. Th?s? details ar? essential for v?rifying your KYC r?gistration status.
• Step 4: Enter the captcha (capture) code and click on the 'Submit' button.
• Step 5: The status of your eKYC verification will then display on the screen.

Takeaways

In conclusion, the eKYC process has revolutionised identity verification by streamlining the verification process, reducing the amount of paperwork required, and increasing overall efficiency. With the use of digital technologies, eKYC has made it convenient for individuals and businesses to authenticate their identities, and has also helped in the prevention of fraud and identity theft. Overall, its implementation has greatly benefited the Indian population and the economy as a whole.

One of India's top digital lending platforms, FlexiLoans uses eKYC as a secure and efficient way to authenticate the identity of loan applicants, ensuring that the lending process is quick, reliable, and hassle-free. Click here to take an easy business loan today!

Frequently asked questions