eKYC Process

Overview

In light of the accessibility of financial goods and services on digital platforms, it becomes imperative for verification procedures to follow suit. Recent legislation has enabled financial institutions to conduct the onboarding process online. The utilisation of the eKYC process makes it possible to expedite the processing of financial transactions by leveraging electronic verification methods. It replaces traditional manual procedures such as physical document submission and in-person identity verification.

By opting for the eKYC process online, you can provide the requisite information and authenticate 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 services increasingly transition to the digital realm, eKYC serves as a vital tool for financial institutions to ensure safe, secure 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 eKYC with just a few clicks of your mouse.

• Convenient

The eKYC process has significantly simplified the establishment of demat 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. Moreover, the use of encrypted servers in the eKYC process online ensures a higher level of security, minimising the risk of fraudulent activity.

As a result, individuals and organisations can enjoy the benefits of efficient and secure account setup, reducing paperwork and saving time and money while maintaining the integrity of the system.

• 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 the bank could access your personal data stored in physical documents. However, eKYC ensures safety by preventing data sharing or tampering. Additionally, the eKYC process eliminates the risk of loss or damage to essential papers since everything is stored 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 safeguarded, making it a reliable and convenient option for account setup 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 eliminates the need for physical visits and allows you to go through the process at your pace. Not only is the eKYC process faster than traditional methods, but it also provides a more comfortable experience for customers.

The streamlined and user-friendly nature of the electronic process enhances overall customer satisfaction and contributes to a positive experience. By leveraging technology to facilitate remote verification, businesses can provide their customers with a seamless and hassle-free onboarding process.

• Extremely Quick

Compared to traditional KYC processes that require physical visits to branches for paper submission, the online eKYC process provides a significantly faster alternative. It enables fulfilment of all requirements online, eliminating the need for in-person visits. This digital approach drastically reduces processing time, making the eKYC process considerably quicker than its traditional counterpart.

The speed and convenience offered by eKYC contribute to a more cost and time-effective customer verification process in today's digital age.

• Automated Process

The eKYC process is an entirely automated system that eliminates the need for human intervention in transmitting KYC data instantly. Unlike the traditional paper-based method, which often consumes days or even weeks, the online eKYC process is remarkably efficient, taking only a few minutes to complete.

With the elimination of manual data entry and the seamless integration of electronic systems, the eKYC 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) database stores the information of over 1 billion Aadhaar card holders 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 verify 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 eKYC 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 accept digital versions. 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 eKYC:

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 the match, UIDAI securely transmits the data to the financial institution, which proceeds to authenticate 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. When you enter this password, the system confirms your Aadhaar and the information is sent to the service provider for verification. 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 complete the eKYC process and can be read by code scanners to extract the data, which is then utilised for Aadhaar authentication.

The Steps Involved in the eKYC Process

To avail of any service that requires KYC verification, such as opening a bank account, investing in mutual funds, applying for a loan, or buying insurance, you can opt for eKYC using your Aadhaar number. You can complete the eKYC process quickly and easily by following these steps:

1. Visit the official website or app of the service provider and select the option 'e-KYC using Aadhaar'.
2. Enter your Aadhaar number and consent to share your KYC data with the service provider.
3. You will receive an OTP on your registered mobile number or email address, and you need to enter it on the website 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 e-Aadhaar or perform a face verification using their webcam or smartphone camera.
6. The service provider will then complete the eKYC verification and confirm the activation of the service.
7. You will receive a confirmation message or email from the service provider with the details of the account or policy.
8. You can access the account or policy online using your login credentials or OTP.
9. You can also download your eKYC document from UIDAI's resident portal (https://resident.uidai.gov.in) for future reference.
10. Lastly, you can update your KYC data online through UIDAI's portal or app whenever there is a change in your personal information.

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

To avail of any service that requires KYC verification, such as opening a bank account, investing in mutual funds, applying for a loan, or buying insurance, you can opt for eKYC using your Aadhaar number. You can complete the eKYC process quickly and easily by following these steps:

1. Visit the official website or app of the service provider and select the option 'e-KYC using Aadhaar'.
2. Enter your Aadhaar number and consent to share your KYC data with the service provider.
3. You will receive an OTP on your registered mobile number or email address, and you need to enter it on the website 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 e-Aadhaar or perform a face verification using their webcam or smartphone camera.
6. The service provider will then complete the eKYC verification and confirm the activation of the service.
7. You will receive a confirmation message or email from the service provider with the details of the account or policy.
8. You can access the account or policy online using your login credentials or OTP.
9. You can also download your eKYC document from UIDAI's resident portal (https://resident.uidai.gov.in) for future reference.
10. Lastly, you can update your KYC data online through UIDAI's portal or app whenever there is a change in your personal information.

• The eligibility requirements for the online eKYC process in India include a registered Aadhaar card and an accompanying mobile number. These requirements enable safe communication and authentication throughout the verification process. Furthermore, the Indian government has made Aadhaar enrollment open to all persons, allowing any Indian citizen to get an Aadhaar card, thus facilitating eKYC access.
• To engage in the eKYC process, you must agree to share your KYC information with the service provider through Aadhaar authentication. This authorisation shows that you are aware of and provide consent to exchanging personal information for verification purposes.
• Depending on the service provider's rules, you may need to produce a self-attested copy of your e-Aadhaar card. This card is a digital version of the Aadhaar card that is available on the UIDAI website and serves as a method of document verification, assisting in confirming the accuracy of the information supplied.
• In some instances, the service provider may request you to do a face verification. The online eKYC process may require a live video or selfie to verify the authenticity of your Aadhaar card. Face verification adds an extra layer of security and helps prevent identity theft and fraudulent activities.

How Do You Check the Status of Your eKYC Processe

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, number or PAN card. These details are essential for verifying your KYC registration 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