The Video KYC Evolution: How it will Benefit Banks and Financial Institutions?

The Video KYC Evolution: How will it Benefit Banks and Financial Institutions?

Video KYC is an innovative technique that leverages video chats and advanced digital

technology to remotely verify customer identities, eliminating the need for physical presence. This blog delves into the 7 key benefits of video KYC. It also gives you a comprehensive timeline of the evolution of KYC-Know Your Customer. But first, let us understand what actually is Video KYC:

What is Video KYC? Video KYC (Know Your Customer) is a cutting-edge technique for remote identity verification that makes use of video chats and digital technology. It enables companies, especially financial organisations, to validate a customer's identification without requiring their actual presence.

A customer engages in a live video call with a verification agent or system during a video KYC process. The caller is forced to present identification—such as a passport or driver's licence—and respond to questions designed to verify their identity. The verification agent compares the customer's face to the image on the identity document using AI and biometric technology to determine whether the documents are authentic.

The Evolution of KYC- A Timeline ● ●

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Here is a brief timeline of the evolution of Video KYC: 2000s: The emergence of electronic KYC (e-KYC) began to streamline verification processes by allowing customers to submit digital copies of identity documents.

2010s: Regulatory bodies worldwide introduced stricter AML (Anti-Money Laundering) and CDD (Customer Due Diligence) regulations, emphasising the importance of robust KYC procedures.

2016: India introduced Aadhaar-based e-KYC, allowing individuals to verify their identity and open bank accounts online using their Aadhaar number.

2020s: Video KYC gained prominence as an evolution of e-KYC, enabling remote customer verifications through live video interactions. It combined the efficiency of digital processes with the security of face-to-face interactions.

2020s: Global financial institutions increasingly adopted Video KYC to improve customer experiences and enhance due diligence efforts. The technology continued to evolve with AI-powered identity verification and biometric recognition.

How does Video KYC work?- 9 Step Guide 1.

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Initiation: Customer schedules a video call.

Document Presentation: Customer shows identity documents during the call.

Biometric Authentication: Facial recognition verifies the customer's identity.

Questionnaire: Customer answers identity-related questions.

Consent and Recording: The call is recorded, and consent is obtained.

Verification: Verification agent or system assesses identity authenticity.

Results: Customer is informed of the verification outcome.

Documentation: Digital records are securely stored for compliance.

Completion: Verified customers can access services or perform transactions.

7 Benefits of Video KYC to Banks and Financial Institutions: 1. Cost-Efficiency: Video KYC eliminates the need for customers and bank representatives to travel for physical document verification, reducing expenses. It's a cost-effective solution that also avoids the need for extensive document authentication and processing.

2. Accelerated Onboarding: Traditional KYC procedures often consumed up to 15 days, creating a cumbersome experience. In contrast, Video KYC streamlines the process into a single video session, completing KYC in just a few hours. This expedites the onboarding of customers, enabling faster access to financial services like loans and credit cards.

3. Improved Time Management: Standard KYC requests involve multiple entities and can take several days, leading to potential drop-offs. Video KYC minimises drop-offs by facilitating

real-time interactions between customers and agents, ensuring a seamless and efficient process.

4. Enhanced Risk Mitigation: Video KYC empowers banks and financial institutions with greater control over the authentication process, reducing reliance on third-party vendors who collect documents. This mitigates risks associated with handling sensitive customer data, enhancing security for all stakeholders.

5. Enhanced Customer Experience: Customers prefer service providers that offer hassle-free experiences with minimal procedures. Video KYC allows customers to complete the authentication process from the comfort of their homes or any remote location, delivering a smooth and convenient experience.

6. Meeting Industry Needs: Video KYC is particularly beneficial for smaller banking and financial service providers, catering to niche markets with cost-effective solutions. It bridges the gap for micro-businesses that may find physical KYC solutions financially challenging, thus expanding the financial services ecosystem.

7. Data Security: All customer KYC data obtained through Video KYC conversations is securely stored on the bank or financial institution's servers. This ensures data protection, as there are no intermediaries involved throughout the KYC process.

Frequently Asked Questions about Video KYC: Is Video KYC secure, and how is customer data protected? ● Video KYC solutions employ robust security measures, including encryption of data during transmission and secure storage practices. Customer data is stored securely on the bank or financial institution's servers, reducing the risk of data breaches.

Can Video KYC be integrated into existing banking systems? ● Yes, Video KYC can be integrated into existing banking systems and workflows. Banks and financial institutions can work with technology providers to seamlessly incorporate Video KYC into their operations.

Does Video KYC reduce the risk of fraud and impersonation? ● Yes, Video KYC helps reduce the risk of fraud and identity theft by enabling real-time verification of customers' identities through video calls. This verification process enhances security and authenticity.

Conclusion: Video KYC not only accelerates onboarding but also reduces costs, improves efficiency, enhances security, and offers a superior customer experience. It meets the evolving needs of the industry and strengthens data security for all stakeholders.

Unlock the future of KYC verification with Veri5Digital's Video KYC, an RBI-approved V-CIP solution. Harness the power of AI-driven customer identification to accelerate onboarding, automate document collection, and ensure secure face matching. Revolutionise your KYC process nationwide with Veri5 Digital.