The Game-Changing Power of OKYC in Customer Verification
The “Know Your Customer” (KYC) process is a cornerstone for establishing trust and ensuring regulatory compliance in financial services. In 2016, the Reserve Bank of India (RBI) implemented the eKYC process to facilitate the customer onboarding procedure for financial institutions with the circular of Master Direction – Know Your Customer (KYC) Direction, 2016.
With the advent of technology and the evolution of digital transactions, a convenient and more secure KYC process has emerged on the scene: Offline Know Your Customer or OKYC. On 8th November 2021, the government officially announced the Aadhaar (Authentication and Offline Verification) Regulations, 2021 under UIDAI. These regulations provide comprehensive guidelines for facilitating offline Aadhaar verification within the e-Know Your Customer (e-KYC) process.
What is OKYC?
OKYC, or Offline Know Your Customer, is a digital verification process utilized by banks and financial institutions to confirm the identity of their customers. It is often referred to as eKYC or OKYC Aadhaar due to its reliance on Aadhaar information.
An Offline Know Your Customer (OKYC) document is a secure and shareable form of identification that can be utilized by any individual holding an Aadhaar number for offline verification purposes.
According to Section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, offline verification is a novel method for verifying the identity of an Aadhaar holder that does not require authentication.
To avail of this service, a resident who wishes to use OKYC must generate their digitally signed offline XML document by visiting the UIDAI website. The offline XML document includes crucial details, such as
- Name
- Address
- Photo
- Gender
- Date of Birth (DOB)
- A hash of the registered Mobile Number
- A hash of the registered Email Address
- A reference ID
The reference ID consists of the last four digits of the Aadhaar number, followed by a timestamp. Importantly, OKYC offers an offline Aadhaar verification solution to service providers and Offline Verification Seeking Entities (OVSEs) without necessitating the collection or storage of the Aadhaar number itself. This ensures both security and privacy in the verification process.
Offline Know Your Customer (OKYC) is a modern approach to customer verification that leverages technology to streamline and enhance the KYC process and Customer due diligence. Unlike traditional KYC, which relies heavily on in-person verifications and physical document submissions, OKYC introduces a digital dimension to the verification process, offering greater convenience and efficiency.
Traditional KYC vs. OKYC (Offline Know Your Customer)
OKYC represents a significant advancement over traditional KYC processes, offering efficiency, cost savings, and accessibility while maintaining robust security measures. This shift towards digital identity verification aligns with the broader digital transformation trend across various industries.
Traditional KYC:
- In-person verification : Traditional KYC processes often require individuals to visit brick-and-mortar locations such as bank branches or government offices for identity verification. This requirement is time-consuming and inconvenient.
- Physical document submissions : Individuals are typically required to provide physical copies of identity documents. This introduces the risk of documents being lost, damaged, misplaced, or fabricated, adding to the complexity of the process.
- Lengthy processing times : Due to manual document verification and in-person checks, traditional KYC processes often have longer processing times, leading to service access delays.
- Higher operational costs : Establishing and maintaining physical infrastructure, staffing requirements, and manual processes increase business and government agency expenditures.
- Limited accessibility : Traditional KYC processes are not easily accessible to individuals in remote areas or those with mobility challenges, limiting their ability to access essential KYC services due to geographic constraints.
Offline Know Your Customer (OKYC) :
- Digital verification : OKYC leverages digital technology for identity verification, eliminating the need for in-person visits and physical document submissions.
- Remote document submissions : Users can submit their identity documents electronically, reducing the risk of document loss and simplifying the process for all parties involved.
- Expedited processing : With automated verification algorithms and digital workflows, OKYC significantly reduces processing times, enabling faster access to KYC services.
- Cost-effectiveness :OKYC solutions are cost-effective for businesses as they require fewer physical resources and manual interventions that translate to lower operational costs.
- Enhanced accessibility : OKYC’s digital nature makes it accessible to a broader spectrum of individuals, including those in remote areas, contributing to financial inclusion efforts.
| Factors | Traditional KYC | OKYC |
| Verification | In-person verification | Digital verification |
| Document Submission | Physical document submissions | Remote document submissions |
| Processing | Lengthy processing times | Expedited processing |
| Cost | Higher operational costs | Cost-effectiveness |
| Accessibility | Limited accessibility | Enhanced accessibility |
How to Conduct OKYC Offline Verification?
Customers can complete KYC offline, although this process may take up to 7 days for KRA approval. To perform offline KYC, customers can follow these traditional steps:
- Download and complete the KYC form.
- Provide your Aadhaar or PAN details.
- Visit a KRA office to submit your application.
- Include proof of identity and proof of address with your application.
- In certain cases, you may be required to submit biometrics.
- Upon submission, you will receive an application number for tracking your KYC status.
But this process is lengthy and time-consuming. Under UIDAI regulations, Aadhaar holders have the option to provide their Aadhaar paperless offline e-KYC data to authorized agencies (OVSEs) for the Aadhaar e-KYC verification process. The authorized agency will then cross-verify the Aadhaar number and demographic details provided by the Aadhaar holder with the information stored in the central database.
Offline Aadhaar Verification: Choose Your OKYC Method – XML or QR Code
The OKYC process offers two methods of completion: XML and QR code.
In the XML-based process, data packets containing the individual’s Aadhaar number and demographic information are exchanged between the requesting entity and the Aadhaar database. The information provided is then cross-verified with the Aadhaar database to confirm the individual’s identity.
On the other hand, the QR code-based OKYC process utilizes a QR code that carries the Aadhaar number and demographic details of the individual. This QR code can be effortlessly scanned using a mobile device, and the information it holds is verified against the Aadhaar database to establish the individual’s identity.
Both the XML and QR code-based processes are characterized by their speed and efficiency, playing a pivotal role in simplifying the verification process for a wide range of government and private sector services. As India continues its digital transformation, the significance of eKYC has grown substantially, addressing the demands of an increasingly digitized service landscape.
In case of offline verification of Aadhaar using an XML file or Aadhaar Secure QR Code, it shall be ensured that the XML file or QR code generation date is not older than three working days from the date of carrying out V-CIP.
Here’s a simplified explanation of how to generate OKYC Aadhaar Document:
- Visit OKYC Platform : Visit the URL- https://myaadhaar.uidai.gov.in/offline-ekyc
- Enter Details :Users provide personal information, i.e., ‘Aadhaar Number’ or ‘VID’, and the displayed ‘Security Code’ on the secure digital platform, asking for OTP for verification.
- OTP Received : An OTP will be sent to the registered mobile number linked to the provided Aadhaar or VID. Users can also find the OTP in the m-Aadhaar mobile application by UIDAI.
- Share Code : Users can enter the OTP received and create a ‘Share Code,’ which will serve as the password for the ZIP file.
- Download XML : Users can download the digitally signed XML on their device. Alternatively, users can conveniently download the offline Aadhaar XML from the mAadhaar app.
Leverage Offline Aadhaar XML for OKYC Verification
The Offline Aadhaar XML Verification API is a powerful tool that facilitates document verification for KYC processes and secure digital onboarding. The Digital KYC tool extracts and authenticates critical demographic data from Aadhaar XML files.
Document verification is a systematic process encompassing specific steps and techniques businesses employ to ascertain the authenticity of their customers’ identities. It involves a series of rigorous validation checks that scrutinize the provided identification documents and validate their legitimacy by cross-referencing the data with information stored in the government database.
The OKYC API solution provides a step-by-step guide for KYC verification.
- Document Collection : The initial phase begins with capturing the customer’s identification document. Aadhaar XML files are digital documents that contain essential information about individuals, including their name, father’s name, DOB, address, and Aadhaar number.
- Data Extraction : The process advances by employing optical character recognition (OCR) technology to extract essential personal information, such as the individual’s name, date of birth, and address, from the Aadhaar XML/ZIP file.
- Comparison & Cross-Verification : Following data extraction, thorough background checks are conducted, and a meticulous comparison is made between the document’s information and the retrieved data from the UIDAI database.
- Authentication : Ultimately, the process culminates in document validation, where cross-referencing with government databases or authoritative sources is performed to confirm the authenticity and legitimacy of the document’s data.
The Offline Aadhaar XML Verification API offers a robust KYC identity verification process solution and promotes data accuracy in various industries and applications. It simplifies compliance with KYC regulations, bolsters security, and contributes to streamlined customer onboarding and authentication.
Benefits of OKYC for Businesses
OKYC brings a multitude of advantages for businesses operating in the digital era:
- Enhanced Privacy : One of the most significant benefits of this system is enhanced privacy. With offline e-KYC, you can share your information directly with the concerned entity without involving the UIDAI (Unique Identification Authority of India). This means your personal data remains confidential and is not exposed to unnecessary parties.
- Aadhaar Number Security : Offline e-KYC ensures that your Aadhaar number remains hidden during the verification process. This added layer of security reduces the risk of identity theft and misuse of your Aadhaar number.
- No Core Biometrics : Unlike traditional KYC processes that may require core biometrics (such as fingerprints or iris scans), offline e-KYC eliminates the need for these sensitive data points. This ensures that your biometric information is not involved in the verification, reducing potential security concerns.
- Control Over Data Sharing : With Offline e-KYC, you can control whom you share your data with. This empowers you to decide which entities or organizations can access your information, giving you greater control over your personal data.
- Digital Signature for Security : The UIDAI digitally signs the offline e-KYC document, providing an added layer of security. This digital signature can detect any tampering or unauthorized changes to the document, ensuring the integrity of your data.
- Password Protection : The offline e-KYC document is password protected. You create a unique Share Code as the password when generating the document. This password protection prevents unauthorized access and adds an additional level of security.
- Ease of Use : Generating and sharing an offline e-KYC document is remarkably straightforward and user-friendly. It’s designed to be accessible and convenient for individuals, making it a practical choice for various identity verification needs.
Aadhaar Paperless Offline e-KYC offers a host of advantages, including enhanced privacy, data security, control over data sharing, and robust authentication mechanisms. This innovative solution not only safeguards your personal information but also simplifies the process of identity verification, ensuring both security and convenience.
Simple KYC Verification with Our Secure OKYC Verification Tool
SignDesk, a software solution provider, offers integrated API solutions that help with multiple types of verification processes. Our offline verification OKYC API tool can verify customer identification instantly, providing a transformative and secure customer experience. Its ability to enhance customer onboarding, reduce operational costs, and improve security positions it as a critical tool for businesses seeking to thrive in the digital age.
Streamline customer verification in bulk on the secure digital platform with the help of the offline verification tool.