Note: RBI(Reserve Bank of India) has issued a notification dated 09th January 2020, officially recognizing the Video-Based Customer Identification Process (V-CIP) as a method of customer identification.
Video KYC Solution
The recent amendment in The Prevention of Money Laundering (PMLA) Act 2002 by the Ministry of Finance allows several modes of capturing details of customers electronically. The notification states that the government should bring in, digital KYC to capture customer details electronically. Subsequently, RBI has legitimized the Video-Based Customer Identification Process as a means to verify customers, allowing onboarding via video KYC authentication.
Banks are now allowed to carry out an Aadhaar verification for any person who uses their Aadhaar card for identification. The proof of possession of the Aadhaar card has been added to the list of official documents needed for verification.
Digital KYC means capturing a live photo of the client with official and valid documents such as the Aadhaar card or any other government document, this photo is taken by a government official. Digital signature and equivalent e-documents have also been allowed by the government as a way to complete the digital KYC process.
The expert committee of micro, small, and medium enterprises (MSMEs) has suggested that the video KYC verification can be used as another way to verify the identity of a person.
How Video KYC Boosts Businesses
The PMLA Act states Investment platforms, telecom companies, and lenders can acquire details of the customer digitally before acquiring them on their platforms. The ease of performing a video-based KYC is extremely cost-effective and saves entities a lot of time. A report by the expert committee of MSMEs has suggested certain steps to perform KYC via video.
The following steps must be followed to perform a video-based KYC:
- Customers of MSMEs need to register on the website or mobile app of the entity
- The customer schedules a date and time for the onboarding process to start
- An official from the MSME initiates the video KYC process by inviting the customer to a video call
- The customer’s Aadhaar card is then verified. This is done through Aadhaar authentication for banks and offline for other entities
- The official asks the customer to display their PAN card, whose image is captured and authenticated
- The official also verifies the customer’s real-time location using geo-tagging software
- The official then matches the customer’s image captured on video with the image in the PAN card using facial matching capabilities
- The official asks the customer three random questions to ensure that it is a live interaction
- The session is concluded and the official decides whether or not to accept the customer’s video KYC information
- Finally, the official stores the recorded video interaction for future use
Image proof of identity and address with the video id KYC is uploaded to the platform for digital identification. Once the verification process is complete the customer is duly informed. If any customer is not comfortable with the digital process an option of a physical visit by the MSMEs representative is possible.
Advantages of Video KYC in India
- Video KYC allows customer verification using facial matching, automated data extraction, and Machine Learning techniques and is done all in real-time
- The process for video KYC can be done from the comfort of your home. All you need is a laptop, smartphone, or tablet with a working internet connection
- All interactions are recorded and stored for the future
- Onboards customers extremely fast using Artificial Intelligence (AI)
- The process slashes onboarding costs by 90% and drastically reduces turnaround time
How does Video KYC Impact us in 2020?
Several banks and lending institutions have started the process of implementing guidelines for an effective video KYC process. Multiple products such as remote onboarding of savings account customers and acquiring a credit card can be done through the video KYC process. A lot of non-banking lenders are also in the process of implementation.
Here are a few key points on how video KYC will impact and benefit us in times to come:
- Prevents scams and malicious activity from taking place
- Dealing with criminal activities such as money laundering
- Making sure investor assets are safe
- Helps in fighting fraud
- Creates a streamlined process through automation
- Reduces paperwork
- Extremely cost-effective
Digital KYC – The Future
SignDesk has launched a product called Scan.it which helps users to submit KYC information through a video. Customer experience is improved through digital video while saving on several KYC costs. Scan.it onboard customers securely and within seconds using AI-based technology.
You can use scan.it for client on-boarding, user Registration, processing high profile transactions, re-verification of existing users. Scan.it also ensures regulatory compliance with the RBI guidelines and replaces the outdated authentication mechanism.