Authentication and verification of personal information are the most crucial parts of any critical procedure, like admission to a university, purchasing a vehicle, and even conducting an online transaction using your bank account. The correct verification of documents ensures a safe and secure system.
The method of collecting and verifying personal information like picture identification documents is known as Know Your Customer (KYC).
When this procedure is carried out online or electronically, it becomes eKYC.
The world of fintech has seen immense growth in the last few years. With people realizing the scope of technology globally, countless startups have emerged, sourcing the benefits of technology by leveling up their digital games. Influential technologies like artificial intelligence, machine learning, blockchain, etc., have transformed how we conduct business and manage financial transactions.
Fintech has taken the world by storm, by becoming a part of our day-to-day lives. Financial institutions have partnered with third-party technology providers to create service suites that suit the needs of today’s generations. With most small and large transactions transitioning into electronic forms, it has become imperative to consider shifting services associated with finance to digital platforms.
What is eKYC?
eKYC is the process where authorities and authorized institutions verify the personal information of customers and clients using digitalized platforms. eKYC is especially important during the onboarding process of new customers and clients. However, KYC remains an ongoing process for most financial institutions.
In the process, new customers provide documents containing their personal information like their name, address, date, place of birth, and so on, which are collected by institutions and verified. The verification process can be as lengthy and cumbersome as required. Officials check the personal information provided against past records in different institutions, government records, the location of the address, and more.
eKYC is the more efficient method of managing fraud and fake identities that could otherwise prove detrimental to the entire system.
Importance of eKYC
There are many factors why eKYC has become a crucial part of our lives today, like:
Quicker Process with Better Flexibility
An eKYC, compared to a usual KYC, gets completed in much lesser time. Digital platforms allow quick verifications by comparing and storing data on different databases. This process gives quicker and more accurate results.
Another key benefit that is achieved from digitalized KYCs is the level of flexibility they offer owing to their quick results. Any changes that are to be made in pre-existing databases can be done, without much time and effort. Such benefits make eKYC much more relevant and essential for the fast-paced world that we live in today.
Reduces Risk of Fraud
As electronic KYC gives better and more accurate results, there is increased protection from the risk of fraud for banks and financial institutions. KYC is an excellent method of filtering out any outliers and unscrupulous activities that might cause damage to banks and their customers. With eKYC, the entire process becomes much more efficient, increasing its applicability.
Better Customer Services
With eKYC, financial institutions and banks can provide better customer services that go along well with today’s digital age. With services like online banking, neo banking, e-payments, digital stock trading, etc., becoming more prominent, it has become essential for authorities to also transition to electronic platforms by providing regulatory services like KYC online. eKYC allows customers to upload their identification documents on official websites, apps, and portals. This tandem between services and technology allows authorities to verify the information provided by customers using various methods like scanned copies, freshly captured images, and biometrics.
Customer services can be improved immensely by using digital counterparts of essential services, like eKYC.
Quicker Onboarding and Merchant Acquisitions
KYC is a crucial part of new customer onboarding and new merchant acquisition. By switching to the digital version, banks and financial institutions can quicken this process, which would otherwise take longer and also distress new customers. These days, most banks have predefined targets of new customer onboarding and merchant acquisition, which are hard to achieve without the enablement of digitalization. By processing new onboarding and merchant acquisition quickly, the monthly and annual targets can be achieved in a more optimized manner.
Part of the Digital Age
Offering eKYC services is a way for banks and financial institutions to let their customers know that they are technologically equipped and in tune with the digital age that has taken over the world. With most firms providing digital options for verification, any firm that does not provide such an option immediately conveys an obsolete system, which can be detrimental to their goodwill and standing. Enabling digital onboarding, eKYC, online banking, and more can help banks and institutions achieve a better reputation among their customers, which would eventually help them build better long-term relationships.
No Restrictions on Location
As eKYC can be conducted from anywhere in the world, it provides better flexibility to customers as they don’t need to show up at their home branches for verifications, account openings, etc. Such freedom attracts customers and allows a quicker turnaround time.
eKYC has become as essential as online banking itself, in today’s day and age. One of the most important factors that govern the reputation and future of banks and financial institutions is their level of integration with digitalization; the deeper the integration, the more reliable and trustworthy their image becomes. As digitalization takes over most industries, it has become imperative for businesses to put on technological capes which would help them relinquish all things obsolete and enter the new age of digitalization built on technology.