KYC compliance is a double-edged sword for financial institutions. On one hand, customers expect quick onboarding with minimum checks and documentation. On the other hand, regulators penalise financial institutions for inconsistencies in identity verification and risk assessments. To bridge the gap, banks, NBFCs and fintech companies continuously focus on revamping their KYC processes to comply with the latest norms while providing customers a seamless onboarding experience.
Here we address the five common challenges customers face during the KYC process and how financial institutions can resolve those using Video KYC (V-KYC). Reach out to us to know more about how Kwik.ID can help you fast-track your KYC compliance.
Challenge 1: Geographical Constraints
The traditional KYC process required customers to submit the application form and the necessary documentation in person. This meant that customers could only opt for banks in their vicinity, based on their current geographical location.
Solution 1: Online Video KYC with Geotagging
In the V-KYC process, the entire verification procedure (including remote onboarding) is conducted online through a live video call. Instead of standing in long queues, a customer can simply schedule a call by registering on the website. Even address verification happens in minutes through geo-tagging using Google Maps.
Challenge 2: Elaborate Documentation
Traditional KYC is a tedious process fraught with endless paperwork. It usually involves lengthy application forms, photocopies of identity and address proofs, and other documents like bank statements and utility bills.
Solution 2: API-Integrated KYC Verification
APIs that aggregate primary data from various verified sources, using e-documents like OVD (Officially Valid Documents) or PAN card, can replace the need for paper-based documentation. Additionally, the use of AI-powered facial recognition tools using Video based KYC identification ensures better accuracy than manual verification.
Challenge 3: Delay in Onboarding
Conventionally, onboarding is a laborious process. Customers in need of urgent funds often turn to other (informal) sources at higher interest rates given the delays in assessment and onboarding.
Solution 3: Real-time KYC verification
Since identification happens in real-time digital, it removes the need for physical signatures and visits from bank officials. This feature makes the onboarding process smoother, allowing customers to have quick access to financing.
Challenge 4: Dropping out of the Process
Given the prolonged KYC process, several customers often drop out midway as they often patience (or the need for funds). Financial institutions lose out creditworthy customers too in this process.
Solution 4: Visibility and Tracking
V-KYC helps customers complete processes faster while also providing visibility on the status of the verification. Banks can ensure customers finish the Video KYC for Banks by tracking what percentage of documentation is completed.
Challenge 5: Cost of Compliance
Traditional KYC involves high costs due to factors like going to the bank in person, procuring several documents, etc., compromising a customer’s time and money. Financial institutions also spend significant amounts in verifying KYC, which is an additional burden to customers in the form of service charges and processing fees.
Solution 5: Internet-powered KYC verification
V-KYC’s internet-powered processes with the help of trustworthy Video KYC vendors make it accessible, affordable and convenient. It also enables considerable cost savings for the service provider, making financing more cost-effective for the customer.