Know your customer, or KYC is an efficient digital KYC technique for confirming the identification of each consumer who joins a financial organisation (banks or NBFCs). To stop frauds like money laundering and terrorism financing, it is important to confirm that the individual is who they say they are.
During the COVID-19 lockdown, it was obviously impossible for the individual to be physically present as required by the standard KYC approach at the bank or NBFC’s office. Because of these geographic restrictions, firms were unable to onboard remote clients.
At that time, organisations made the decision to include technology, which led to the development of digital KYC. What does digital KYC verification entail, and why is it superior to physical KYC verification? Follow along to learn more.
Digital KYC:
Digital KYC is an online identity verification process that allows users to access any financial product available on the market. Typically, users transmit their live photo or video and legally valid documents to a company representative during a digital KYC. The information is then cross-checked against official records, and if everything checks out, the KYC is processed.
Different of Online KYC verification:
Digital KYC form
The customer must fill out an online KYC form and submit it to the appropriate organisation in order to undergo this type of digital KYC verification. However, the customer must sign the form by selecting one of the methods listed below:
The KYC form can be printed out by the customer, who can then sign it and mail the document to the physical address of the relevant organisation.
A more convenient and fully digital method is for the customer to append a digital signature to the online KYC form and submit it to the organisation.
Video-based KYC:
The KYC process that uses videos may be the most legitimate and approved by the Reserve Bank of India. The registered officer takes the customer’s live picture, video, and legitimate documents during a thorough audio-visual encounter. A new bank account is typically opened via video-based KYC.
Here’s an overview of the process:
- Before accessing the service, the customer must finish the video KYC verification after signing up for it.
- The customer is then sent a link by text message or email, which they must click.
- The video KYC will then be conducted by an executive from the relevant organisation on the other end.
- Along with the necessary documents, like the PAN card or the ID card, the executive takes a live photo and video of the customer. Additionally, geotagging is used to confirm customer location.
- Within a few days of collecting all the necessary information, consumers are informed of the KYC status.
Check the RBI’s video KYC regulations, nevertheless, to make sure they are being followed to the letter.
KYC-based on OTP
Another sort of digital KYC often used to open digital wallets or bank accounts is OTP-based KYC verification. The ID card’s registered mobile number is often where the OTP is sent. The steps in the technique are as follows:
- The customer fills out the necessary information and then selects the ID card e-KYC tab.
- The user is then asked to enter their ID number.
- After then, the customer receives an OTP on the mobile device connected to their number.
- The KYC procedures are finished after the customer enters the OTP.
Why is digital KYC necessary?
KYC, or identity verification in general, is a technique that can help stop:
- Identity theft: It is prevented via digital KYC, which enables financial institutions (including those in the gaming, gambling, and betting industries) to verify a customer’s legal identity by using information like address and age. This in turn aids in preventing identity theft.
- Financial fraud: On gaming websites, hackers frequently create phoney accounts in order to steal money from other users, generally children. However, businesses may stop such fraud with digital online know your customer.
While also assisting organisations with:
- Create a seamless onboarding process: With digital KYC, businesses can provide their clients with a more sophisticated and hassle-free onboarding experience, increasing customer retention and lowering churn.
- Gain new clients: Companies can now easily onboard clients from all over the world. It aids them in growing their user base, which boosts revenue.
In the end:
Unquestionably, one of the most significant technology advancements in business is digital KYC. After all, it enhances the customer onboarding experience, decreases fraud, money laundering, and identity theft, and brings in new clients for a company.
Therefore, stop waiting and implement digital KYC within your company. For the greatest experience, make sure to pick a trustworthy digital KYC partner.