The RBI (Reserve Bank of India) clarified its stance on KYC. Know Your Customer (KYC) refers to the process of identifying and verifying customer information, both within and outside India that is used by financial institutions to help prevent fraud and money laundering activities.
Under the Banking Regulation Act, 1949, every bank has to maintain certain records as per the requirements laid down by RBI from time to time. In light of this, banks have been directed to ensure strict compliance with the KYC norms prescribed by RBI from time to time with respect to their existing as well as new customers.
Now, the Reserve Bank of India has given the go-ahead to Video-Based Customer Identification Process (V-CIP) or eKYC, a notification dated January 9th, 2020, meaning banks can now use video as part of their Know Your Customer (KYC) processes. This will allow them to verify customer identity through biometric data that are captured from videos instead of forcing customers to travel into the bank branch itself. Video KYC can be used by banks as an additional channel for conducting the KYC process and will reduce the dependency on the physical presence of customers at the time of opening of accounts / demats etc., according to the regulator, RBI.
Some of the best benefits of having Video KYC for financial institutions are:
With more regulators around the world embracing Know Your Customer (KYC) best practices, financial institutions are in a constant state of change. It’s no longer enough to ask for documents and an identification number, but banks must understand where clients are in their own life cycle.
Video KYC is an emerging process that simplifies the Know Your Customer (KYC) process. Instead of filling out forms, submitting selfies or scanning documents, you can submit proof of identity via video. This reduces the time it takes to complete the KYC process significantly, which can be especially helpful if you are on the move or need to fill out multiple forms in one day.
KYC regulations are intended to make sure an institution only handles the money of verified, real individuals who are who they say they are. This can be tedious, but it’s an important part of maintaining security, especially if you’re accepting money from investors or offering credit or financing to your customers. This furthers leads to more customer onboarding in the long run.
Artificial Intelligence (AI) and Machine Learning (ML) are changing and disrupting the way we work. The system of customer and process transformations & innovations has always been interdependent. Video KYC and digital accounts are futuristic tools to provide ease to the customer experience by staying up-to-date with the dynamic and fast-moving industry competition and trends.
Video KYC is a more reliable and efficient way to verify the identities of clients or employees compared to traditional paper-based procedures. The Video KYC process will increase customer satisfaction as it replaces tedious paperwork with instant verification. Also, data stored on videos are stored forever and can be used as proof of compliance with Know Your Customer (KYC) policies in case of any investigations. Moreover, financial institutions using video verification have higher ROI compared to those using less secure methods or going without any form of verification at all due to legal requirements.
Video KYC solution or digital KYC is a surefire way to authenticate identities. With security on everyone’s mind, it makes sense to add additional layers of security beyond simple user names and passwords. We think it’s time for companies to start asking their customers to identify themselves on video. That means you, too! Of course, we don’t expect everyone reading these words to just open up a webcam and start recording themselves today. Video KYC systems aren’t just for consumers; they work great for employee identity management as well! If you’re not sure about adding video identification into your business but want better security than what standard login forms offer, contact us today.