Video KYC: Revolutionising Digital Onboarding and Identity Verification

The Know Your Customer (KYC) process has traditionally been a linchpin for establishing trust between financial institutions and their clients. However, traditional KYC processes, often requiring physical document submission and in-person verification, have become outdated in a tech-driven world. Enter video KYC, a groundbreaking approach that simplifies the KYC process while retaining security and regulatory compliance. This blog provides a comprehensive guide to video KYC, delving into its meaning, process, benefits, and its future in digital onboarding. Read on.  

What is video KYC?

Video KYC, or video-based Know Your Customer, is a digital process that enables organisations to verify the identity of individuals remotely through live video interaction. Using this method, companies can onboard customers in real time without requiring physical presence, making the process faster and more efficient. This process was introduced as a result of the Reserve Bank of India’s (RBI) amendment in 2020, allowing financial institutions to conduct KYC remotely via video conferencing while adhering to strict security and compliance standards.  

How video KYC works

The video KYC process is straightforward, combining technology with regulatory checks to ensure a seamless yet secure onboarding experience.  

Step 1: Customer initiation – The customer begins the KYC process by providing preliminary details online, such as their name, contact information, and government-issued ID details.

Step 2: Scheduling a video call – Once the initial information is submitted, the customer is prompted to schedule a live video call with a KYC representative.

Step 3: Live video verification – During the video call, the customer is asked to:  

1. Display their government-issued ID (e.g., Aadhaar, PAN card) for verification.  

2. Perform specific actions, such as nodding or smiling, to confirm their presence and prevent deep fake or AI-based fraud.

Step 4: Document validation – The KYC representative cross-checks the provided information with the visible ID, ensuring all details match. In some cases, Optical Character Recognition (OCR) software is used to automate this process.

Step 5: Face match and liveliness detection – Advanced technologies like AI-driven facial recognition are employed to match the customer’s face with the photograph on their ID. Liveliness detection ensures the person on the call is not a pre-recorded video or static image.

Step 6: Regulatory checks – The collected data is run through anti-money laundering (AML) and politically exposed persons (PEP) databases to ensure compliance with global standards.

Step 7: Approval or rejection – Once all verification steps are completed, the system automatically approves or rejects the KYC application. The entire process often takes less than 10-15 minutes.  

Benefits of video KYC

1. Convenience and speed: Video KYC eliminates the need for physical visits, allowing customers to complete the process from the comfort of their homes. This is beneficial for people in remote areas or those with mobility issues.  
2. Cost-efficiency: Traditional KYC methods involve substantial costs for infrastructure, paperwork, and human resources. Video KYC reduces these expenses by digitising the process.
3. Customer experience: The streamlined process, combined with real-time verification, creates a hassle-free experience for customers.
4. Scalability: Video KYC offers immense scalability for businesses. Multiple KYC verifications can be conducted simultaneously, making it suitable for organisations handling large volumes of customers.
5. Improved security: Technologies like AI-based face recognition, OCR, and AML screening add layers of security to the process, reducing the chances of fraud or identity theft.
6. Regulatory compliance: Video KYC adheres to stringent regulatory standards, ensuring businesses stay compliant with legal and financial norms.  

Use Cases of video KYC

Video KYC has become a linchpin for industries that rely on ID verification. Its applications span various sectors:  

• Banking and financial services: Banks and NBFCs use video KYC to onboard customers quickly and securely, enabling them to open savings accounts, apply for loans, or invest in financial instruments remotely.
• Insurance: Insurance providers leverage video KYC to verify the identities of policyholders during the onboarding process.
• Fintech startups: Fintech platforms like digital wallets and payment services use video KYC to provide instant account creation and activation, catering to tech-savvy consumers.
• Real estate: Developers and agents use video KYC for verifying tenant or buyer details.
• E-commerce and gaming: E-commerce platforms and online gaming companies utilise video KYC to verify user identities, reducing fraud and ensuring a secure environment for transactions.  

Challenges in video KYC implementation

While video KYC offers numerous advantages, its implementation comes with certain challenges:  

1. Technical issues: Poor internet connectivity can disrupt the live video verification process, leading to delays or failures.
2. Data privacy: Video KYC involves handling sensitive customer information. Businesses should look to invest in robust cybersecurity measures to safeguard this data.
3. User accessibility: Older customers or those unfamiliar with technology may find it challenging to navigate the process.
4. Regulatory variations: Different countries have varying compliance norms for video KYC. Businesses operating globally must tailor their processes to meet local regulations.  

Read also: KYC Fraud: A Growing Threat in the Digital Age

The future of video KYC

As digital transformation picks up, video KYC is expected to become the norm for identity verification. Here are some trends shaping its future:

• Blockchain technology can enhance the security and transparency of video KYC processes by creating immutable records of verification.
• AI will play a central role in making video KYC faster and more accurate through advancements in facial recognition and document validation.
• Beyond finance, industries like healthcare and education are exploring the use of video KYC for patient and student onboarding.
• Governments are likely to introduce more comprehensive guidelines to standardise video KYC processes, ensuring uniformity across industries.  

How video KYC aligns with Gridlines’s services

Gridlines’ video KYC solutions provide a robust and scalable framework for businesses looking to simplify their onboarding processes. By leveraging AI and secure digital tools, Gridlines ensures compliance with regulatory norms while delivering a superior user experience.  

Key features of Gridlines’ video KYC include:  

• Seamless integration with existing systems or platforms for quick deployment.  
• AI-driven facial recognition and liveliness detection to prevent fraud.  
• Comprehensive compliance checks for global regulatory standards.  
• Real-time analytics and reporting for better decision-making.

By understanding the intricacies of video KYC, businesses can harness its potential to create secure, efficient, and customer-friendly processes. With its focus on regulatory compliance and technological advancements, video KYC is not just a trend but a necessity in today’s fast-evolving digital landscape.