Digital Kyc is an effective method of knowing the On-boarding of all the customers who use your service or sign up to your business entity,it is the identification of all the people who onboards the financial institution (banks,or NBFCS).The main purpose of the digital KYC is to determine if all the people who have on-boarded are legitimate customers and not a fraudulent entity.It has also played a vital role in in the prevention of all the money laundering and terrorist financing.
Digital KYC is important to combat the problems with online money laundering,human trafficking,identity theft,data breaches and account takeover fraud. All of these frauds can be avoided by the usage of Digital KYC in banking institutions.we live in a Global village these days and the solutions are also expected to be digitized. In a recent survey Kyc Trends in 2022 states that over 1,000 c institutes exceeds over 100 corporate and financial institutions. It is the next big thing in the world of fin-tech solutions.
KNOWING DIGITAL KYC:
The traditionally used KYC method required the customer’s to be physically present inside the bank at the time of performing their transactions or all the processes linked with the KYC, but it wasn’t possible for the customer’s to be physically present during COVID-19 outbreak, thus businesses couldn’t be performed smoothly because of the barrier for the customers to be present at the bank. This is when the financial institutions shifted towards digital KYC, usually during a traditional kyc the customers share their live photos and images which are then matched with the banks databases to check whether or not the customer trying to access their service is a real person or not.
The types of Digital KYC verification are as follows:
Online KYC form:
It is the KYC digital verification process in which the customers must fill out an online KYC form and submit it to the same respective organization, however the customer must attract their signature to the form using the processes listed below:
- The customer can sign the signature and send it to the physical address of the concerned organization;this method is convenient if the customer has to be physically present at the respective institutions.
- The customer can add a digitized signature if it is not possible for them to be physically present at the firm which is entirely a digital option where the Digital KYC actually steps in and helps the companies to use this form of business effectively.
VIDEO BASES KYC:
The video based kYC is perhaps the procedure that is the most legal and authentic form of conducting the digital KYC.There is a complete audio-visual interaction system which is registered for the online KYC check status as well which is registered within the office which captures photos,videos and other online documents which are required for this process ,it is usually used in the opening of the bank accounts.
- The customers sign up for the service prompted to complete the KYC verification before the accessing the service
- The customer then receives the required link to which they click on
- An Executive form of the organization on the other end will conduct via Video KYC.
OPT – BASED KYC:
OPT based KYC verification is yet another type of digital KYC commonly used to open digital wallets or bank accounts. The OTP is sent usually on mobile phones via VIA text messages .It is the best example of online KYC verification which is used to verify the credentials of the customers in order to fill in the online application form.
The three steps which are generally used are as follows:
- Firstly the customer enters the primary details and reaches the digital KYC tab.
- Once there ,the customer is prompted to the digital KYC tab again
- The customer receives the OTP number on their cell -phones
- Finally the customer enters the OTP number and the process is completed
WHY IS DIGITAL KYC REQUIRED
The digital KYC is the method of identity verification which helps the company to keep a record of their customers ,according to the global KYC standards all the fin-tech companies work in order to keep a track of all of their customers
- Identity threats: Digital KYC allows financial institutions to confirm a customer’s real identity which then prevents the hackers from using the forged or manipulated version of information.
- Financial frauds:Hackers in general create fake accounts and extract money from other users ,usually minors but the implementation of Digital KYC prevents them from committing such frauds.
Digital KYC is undoubtebly the most cruicial technological advances businesses have ever seen in recent years. Most importantly it helps prevent all the activities which lead to fraud,money laundering and identity theft ,it helps you to know your customer’s compliance through digital KYC.It helps with the digital onboarding KYC and keeps the flow of business operations intact.