By Omkar Shirhatti
India has undergone one of the fastest digital transformations across the world in the past decade. The country strives to be at the forefront of innovations being implemented, taking it ahead of its global counterparts. . Consequently, we are now witnessing a significant technological disruption of various industries. The BFSI sector is not immune to these changes and is digitizing its services at a rapid pace..
Along with the digital initiative, India has also seen monumental growth in mobile and internet users since the past couple years. Coupled with one of the cheapest internet prices, Indian banks, FinTechs are looking to offer newer, more innovative and cheaper digital solutions to drive adoption of digital services and reach the last mile users. Furthering the mindset, RBI in early 2020, gave its nod to VideoKYC (Video-based ‘know-your-customer’ services) to augment the traditional forms of identity authentication and in person verification procedures. The SEBI and IRDAI were quick to follow the RBI, authorizing VideoKYC as a valid means of identity verification for a host of banking, financial services and insurance transactions.
Challenges faced by the BFSI sector
The BFSI sector has been plagued by financial frauds, money laundering cases, identity theft, and other challenges over the decades, which were only exacerbated by the legacy processes that continued to be applied by Financial Institutions. This resulted in Banks, Non-Banking Financial Companies (NBFCs), insurance companies, cooperatives, pension funds, and small-scale financial entities, etc. facing problems with scale and the execution of large scale frauds by borrowers. Additionally, adhering to traditional guidelines, banks and other financial institutions were also engaged in person verification procedures, where an agent or a banking representative conducts visits to the individual’s home or a business’s registered address in order to confirm identity and asset holding.. It was expensive, cumbersome, and inefficient. . However, this is changing with the acceptance of eKYC processes, including the adoption of VideoKYC by major regulators in India.
Features of VideoKYC and its application today
The government’s decision allowing Video KYC in early 2020 has facilitated the setting up of a cost-effective and robust procedure for seamless remote onboardings. . Along with that, the COVID-19 pandemic and the social distancing norms gave an impetus to the adoption of VideoKYC, with VideoKYC quickly becoming one of the preferred ways of conducting KYC. It has enabled banks, NBFCs, new age FinTechs, and several others to onboard consumers remotely, ensuring a more comprehensive compliance mechanism, while reducing fraud. Moreover, by the recent mandate of IRDAI, Insurance providers can save resources by not having agents visit the homes of prospective customers during the onboarding process.
Through VideoKYC, banks can conduct verification procedures within minutes through the Artificial Intelligence and Machine Learning technology, thereby reducing the turn-around-time. Karza Technologies, an automation and analytics platform has enabled several additional features on their VideoKYC solution. It has enabled face matching, which matches the facial features of the applicant with official documents such as Aadhar Card, PAN card etc.
Additionally, Karza’s VideoKYC liveness check feature and other anti-spoofing mechanisms ensure the authenticity of the video. . The technology detects whether it is a live recording or a pre-recorded video, thereby eliminating any chance of fraud. It also includes the geo-tagging feature, which records the applicants live location, ensuring the address of the applicant is verified and providing some additional checks. Complete audits trails conducted side by side ensure that other details such as timestamps, collection of user responses during the procedure are carried out ensuring that the onboarding process remains fair, and is not tainted by fraudulent actors. Karza’s VideoKYC solution also permits dynamic scheduling and support of vernacular languages making the solution extremely inclusive, intuitive and flexible for all kinds of users.
Opportunities for the future
VideoKYC provides an opportunity to speed up the onboarding of ‘new to credit’ customers and retaining the process in the post-COVID-19 scenario, as well. Players are innovating to provide added layer of features and intelligence to make fraud detection easier, make documentation seamless and ensure digital inclusion for everyone.
VideoKYC’s success in the BFSI sector will now enable other industries to induct video-based customer identification technology, leading the sector and converting India into a smart and digital economy.
(The author is Co-founder and CEO, Karza Technologies)