BQ Explains: What Banking Customers Need To Know About Video KYC

Video-KYC is an option to a full in-person KYC process that banking customers are required to complete before they avail of services such as account openings and loans.

Digital KYC was permitted even earlier. However, at that time, customers were still eventually required to provide documents in physical form to continue with uninterrupted services.

The newly permitted video-KYC promises to replace the old KYC system completely, with customers no longer required to follow it up with physical verification of documents.

RBL Bank and IDFC-First Bank have launched video-KYC for opening savings bank accounts, while IndusInd Bank has enabled video-KYC for opening savings accounts and has tied-up with BankBazaar for credit card applicants, the banks said in their respective press releases.

BankBazaar has already begun selling loans and credit cards through its platform which is integrated with video-KYC facility of its banking partners. The platform conducts the documentation and application part of the process while the bank will conducts the video process, said Adhil Shetty, chief executive officer, BankBazaar.

“This is an absolute game changer for the industry as the processing is quicker and credit cards and loans being disbursed in a few hours. Most banks expect that at least 70 percent of their sales by December-end will happen through a contact-less mode, for which video-KYC is an integral part,” he said.

According to Deepak Sharma, chief digital officer, Kotak Mahindra Bank, the video-KYC feature will have its own learning curve. So in the interim, the bank has built an integration between its old KYC process and the new one. “This allows the customer to get a limited KYC account, which can be made into a full KYC account, in case the customer is unable to complete due to network issues or document problems,” he said.

Kotak is currently offering the video-KYC facility for customers who wish to open a 811 savings bank account. The bank plans to expand the video-KYC facility on its mobile application in the coming weeks and for other banking services in a phased manner, Sharma said.

While there are some smartphones and web-browsers that do not support the technology, he added that the bank is working to improve and build solutions for these compatibility issues and network problems.

Let’s say a customer applies for a loan or account directly through a banks’ website. Here is how they need to proceed.

1. Fill up basic details on the online form.
2. Provide the bank consent to fetch Aadhaar details and enter the PAN number or conduct an e-PAN verification.
   
3. Officially Valid Documents like PAN, driving license, address/residence proof and bank statements can be uploaded on the website through PDF files or through images off their phone camera. Documents stored on the Ministry of Electronics and Information Technology’s DigiLocker facility can be shared as well.
4. Provide the bank access to the mobile-phone’s location which is geo-tagged
5. Once these steps are completed and the application submitted, the bank will send an SMS to the customer with a link to a bank-hosted webpage. However, some banks automatically redirect the customer from the application webpage to the video call.
6. A bank officer or employee will then start a conversation with the customer to verify their details based on the documents uploaded. They will ask the customer various randomized questions as per the banks’ internal policy.
7. They will check the photograph of the customer on the documents uploaded with a live photograph captured during the video exercise. Banks are also using facial recognition technology to verify the customer on video with the photograph on the documents.
8. The software also will grab details from the documents that the agent may ask the customer to physically display over the video call.
9. Once the all the questions are answered, the agent will make a recommendation approving or disapproving the application.

Only the bank can conduct the video-KYC process, so if a customer applies for a loan on a third-party website they will have to apply for the loan and upload documents on the platform. But only the bank and its official will conduct the video call session.

There are several video-KYC software providers that banks work with like Signzy, inVOID, IDfy, Gieom, Infrasoft Technologies and Syntizen, for example.

Therefore, customers’ should check the bank websites to understand the complete process as the documentation requirements and video-KYC process may differ from entity to entity.

Using Aadhaar is voluntary, as per the RBI’s guideline, so if the customer does not wish to provide their Aadhaar details, banks will have to use other ‘officially valid documents’ which contain the customer’s identity details.

Since banks have access to the Unique Identification Authority of India’s database, therefore under the e-KYC process, customers have to input their Aadhaar number at the time of sign-up which will be verified through a one-time-password sent by the UIDAI.

Alternatively, the RBI has allowed customers to upload an Aadhaar XML or Extensible Markup Language file or use an Aadhaar Secure QR Code for offline Aadhaar verification.

Once the Aadhaar details are uploaded, either through e-KYC or offline, the agent receives a limited amount of information like the photograph on the card, the name, address and date of birth of the customer, which they will verify.

At the outset customers should ensure that if they receive an SMS with a link to the video part of the KYC process, they should be directed to a website that is hosted on the banks’ domain name. The RBI has not allowed the use of third-party applications like Apples’ Facetime or Facebooks’ Whatsapp for video-KYC.

The RBI has said that the Aadhaar number should be redacted when sent to the agent, so at no point should the customer display their Aadhaar card and its number to the bank agent during the video call.

Since some banks send an SMS with a link to the video this can also lead to frauds. To secure themselves, one check customers could do is to ask the agent to show their Identity card before beginning the process and note down their name and employee ID.

Rather than SMS-based links, customers should be redirected automatically to the video call on a webpage from the application stage like how payment gateways work, or they should be allowed to schedule a video call, says Arpit Ratan, co-founder and business head, Signzy.

“As a safeguard, customers should get proof that the video call session is authentic, the bank official is credible, they should be allowed to take screenshots of the call and once the call is over, they should receive an acknowledgement or a recorded copy of the session,” Ratan said.