In hindsight, the onset of video KYC (Know Your Customer) was quite evident. The act of Regulated Entities (REs) having to physically meet a customer at either their house or a convenient common point caused no end of headaches for banks and financial institutions alike. It was a cost that seemed unnecessary… and understandably so, given the fact that that technology has streamlined multiple processes around us. Physical verifications seem archaic in such a landscape – a complaint that has been duly addressed with the arrival of video KYC.
Before an extensive analysis, let’s get the basics out of the way first. What is Video KYC?
As per a recent RBI report, a Video-based Customer Identification Process (V-CIP) will be integrated into the existing KYC infrastructure. This process utilises customer’s live photo using both their OVD (Officially Valid Document) and their geo-location coordinates. The platform through which the video is being taken needs to be owned by the bank/financial institute.
Now that these technicalities are out of the way, it’s time to examine the ground realities of this implementation.
First of all, Video KYC will go a long way in ensuring that processes are paperless, remotely activated, and cost-effective. The latter is especially something to take note of for banks and NBFCs – physical KYCs cost around Rs. 150-200 per customer, while Video-KYC accomplishes the same at the cost much lower than the above. This, coupled with the fact that Video based KYC negates the requirement for endless documentation and door-to-door verification, will play a major role in enhancing the scalability and success of fintech companies.
Digitising the KYC process will also lead to another significant benefit – the fintech industry will have a bigger pool of data that they can analyse for a whole host of functions. After all, technological innovations like Machine Learning, Blockchain, AI, automation, and cloud computing – to name a few – have completely revamped processes across multiple industries. This statement strongly applies to the fintech sector in particular, where this data can be utilised to enable a whole host of functions such as facial recognition, automated customer screening, new-age risk mapping, and everything else along the same lines.
What do these points convey? The implication can be summed up in one word: convenience.
Remote paperless documentation will reduce any hassles, with the added benefit of lowered costs. Along with this, the data generated will go a long way in ensuring that fintech initiatives are carried out with greater precision and effectiveness.
All of these advantages can be enjoyed without any additional effort – if anything, video KYC has lessened the effort companies need to put into their activities. It’s a win-win situation for corporations and customers alike, making it an important development in the fintech domain.