KYC, which stands for ‘Know Your Customer’, must be a familiar term for any Indian who tried to get any utility connections like sim, LPG or open a bank account.
KYC is a regulatory policy that has been developed and applied worldwide to curb identity theft, frauds and money laundering.
Through a KYC form, details of the customer along with photocopies of valid government identity proofs are collected and stored in a database.
eKYC is the electronic version of the KYC which is administered by the Unique Identification Authority Of India (UIDAI).
Like the normal KYC, the idea of eKYC too is to verify the identity of an individual except that it is done online.
How Does eKYC Work?
eKYC aims to achieve paperless identity verification through the Internet. It makes use of the Aadhaar platform to establish the authenticity of a person’s identity.
As of now, only Aadhaar card users can make use of this feature. So, if you don’t have one already, now would be the right time to apply for an Aadhaar.
Typically, eKYC is used by banks or agents providing utility connections or similar services to customers.
Any organization or agent who wishes to confirm the identity of a potential customer can make use of the eKYC.
The customer can simply use his/her Aadhaar card and no other document. This saves the hassle of having to carry a bunch of docs and eliminates the need for in-person verification.
The working of the eKYC is fairly simple. Any authorized agent or institution can make use of the eKYC process.
When a customer approaches an agent/institution with a service request, identity verification of the customer is the first step.
To make things much clear, let’s consider the example of a man who wishes to open a new bank account with a nationalised bank.
Now, the conventional procedure would require him to carry necessary documents to prove his identity and address, and also a minimum amount of cash required to open an account.
If the eKYC process is to be used, here’s what the sequence would look like.
- Customer produces his Aadhaar card before the bank official. The official takes note of the Aadhaar number.
- A biometric scanner captures the potential customer’s fingerprint or retinal image, though fingerprint is the popular choice. Mobile OTP based authentication methods are also made available now.
- Once the device reads the biometric, the value is communicated to UIDAI via secure servers.
- The input biometric value is matched with the value stored in database for that particular Aadhaar number.
- If the values match, it would be safe to assume that the potential customer’s identity is not spurious.
- Following successful verification of the customer’s identity, the UIDAI will release all his credentials like photographs, addresses, date of birth, etc to the bank or agent, thus eliminating the need to carry around multiple documents. The UIDAI lets the agent/organization store a soft copy of all the details in their remote server lending the agent/organization the freedom to access it as and when the need arises.
The Benefits Of eKYC
Aside from the obvious benefits like convenience and paperless identity verification, there are some other benefits which are hard to ignore. They are as follows –
- Not everyone can use eKYC verification services. Only agents and institutions that have been verified by UIDAI can make use of the Aadhaar-based eKYC method. This means that your credentials will never go into the hands of people with malicious intent as long as eKYC is used. Currently, even roadside stalls sell mobile sims after collecting copies of your identity and address proof. This is not a safe arrangement. eKYC eliminates the possibility of frauds and identity thefts.
- The biometric scanners used by agents/institutions too would have to be verified by UIDAI, which adds another layer of security.
- eKYC often allows instant verification and thereby instant opening of bank accounts or mobile sim activations. This is expected to save much time.
- The eKYC process is absolutely free of cost.
Need Aadhaar-based eKYC Services?
The introduction of Aadhaar has opened up new avenues for paperless verifications and fraud deterring methods. For once, the entire country’s population can be digitally recorded and tracked.
Like the Aadhaar based eSign feature which makes use of the Aadhaar number and a mobile number registered with it to digitally sign legal documents, eKYC too is expected to take the country by storm.
Should you need help with Aadhaar, eKYC or eSign services, please contact SignDesk.com and we can help.