The year 2022 will see tremendous changes in the business world, with digitalization being the most significant transformation. With the COVID-19 situation creating doubt, businesses have switched their endeavours to the internet in order to grab the customer base and enjoy the benefits. Banks and financial institutions have taken the most significant steps forward in their customer onboarding processes in comparison to other industries.
As customers become more digital, businesses must find the right blend of security and user experience. Which approach should be used to properly comply with KYC/AML requirements while also providing a better user experience? One such option is Video KYC, which not only allows for real-time customer onboarding and authentication but also adapts to evolving regulatory requirements.
What Is Video KYC and How it is Different from Traditional KYC?
Video KYC, also known as video identification of customers' KYC, is a digitally interactive technique of face-to-face smart biometric authentication in which businesses can conduct their customer identification procedure via a video chat aided by a KYC agent. On the video call, the user is needed to digitally upload the verification documents for authentication.
Know Your Customer (KYC) is a process for confirming a customer's identification and identifying any potential risks linked with that customer. Banks, financial institutions, and any other business dealing with money must comply with KYC/AML rules. Traditionally, businesses have used a physical Customer Identification Program (CIP) to authenticate a customer's identification during the onboarding process. With the traditional KYC process, customers stop the process in the middle because it may take weeks.
The video customer identification process is the digital equivalent of the conventional KYC process, it is faster, more secure, and less expensive. Video KYC minimizes paperwork, expediting the entire verification process and providing real information. Customers are not required to personally visit the company and provide their identification documents in order to open an account. All of that is done remotely, right from registration to onboarding.
Video identification is a popular trend these days, and it is the driving force for the evolving identity authentication sector. Aside from making the authentication process more efficient and cost-effective, the growing number of identification frauds necessitates the use of a secure authentication procedure such as video verification. In the current digital era, security is one of the most important concerns for industries, and video KYC solutions are highly effective in combating fraudsters' clever techniques.
Video KYC is a major leap in the industry, with multiple advantages for all the key players involved in banking and finance business. Here’s a look at how it helps Banks and Financial Institutions.
Key Benefits of Video KYC for Banks and Financial Institutions
Pace-Up Customer Onboarding Process
The traditional KYC process would take up to 15 days in some scenarios, making customer onboarding a tedious process. Video KYC can complete the process in a single video discussion in a few hours. Banks and financial institutions can leverage it to onboard customers much more quickly. This means that loans, credit cards, and other bank or financial institution-provided services can further be disbursed more quickly.
Lower Customer Acquisition Cost
The use of video KYC to complete KYC applications eliminates the requirement for the customer or FI/Bank employee to travel and reach the customer to take forward the onboarding procedure. It also avoids the need for physical document authentication and processing thereby making it less expensive.
Better Time Management
As it involves multiple entities, a standard KYC request takes several days and is susceptible to drop-offs. Video KYC, on the other hand, nearly eliminates customer drop-offs because it is a real-time contact between the consumer and the agent.
Risk Mitigation
Risk Mitigation is a big commercial advantage that video KYC adoption provides. The majority of KYC operations are delegated to third-party vendors who personally collect documents. Vendors handling confidential ID proof documents might put all stakeholders at risk. With video KYC, banks and financial institutions have complete control over the authentication process.
Enhance Customer Experience
Customers can select service providers which guarantee a simple, hassle-free experience with minimal procedures. Potential consumers can complete the e-KYC authentication process from the comfort of home or any remote location with video KYC. Customers prefer organizations that provide video KYC services because of the smooth experience they have.
Catering to Growing Industry Requirements
Video KYC is a great option for small banking and financial services which cater to a niche market as it's incredibly cost-effective. Physical KYC solutions are out of reach for many micro-businesses due to the lack of funds. Video KYC aids in the growth of these companies, hence broadening the financial services ecosystem.
Secured Data
Financial institutions are bound to preserve all the customer KYC data obtained through video KYC conversations on their own servers. In comparison to other e-KYC techniques, the customer data is secured, as all the user data will be stored at the bank/FI and there will be no intermediary throughout the KYC procedure.
Upgrade your KYC Process with Panamax’s Smart Biometrics KYC Solution
Panamax offers smart biometrics solutions and contactless KYC solutions to eliminate any identity concerns in situations where customer data and resources can be stolen, or simply forgotten. It has a unique range of functionalities that offer a simple and user-friendly approach to manage field operations such as KYC data, customer acquisition, and customer registration while ensuring great security. The smart biometrics and KYC solution assist businesses, governments, and API partners in recording and managing customer or visitor data in a variety of separate or combined formats using a PoS device or even a mobile device.
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Contributing Writer: Naishil is a Content Writer at Panamax, Inc. with rich exposure in the field of Creative Content, Marketing Communications and Branding. With an academic background in Mass Communication and Journalism, he has made a career in content writing and has worked upon varied content pieces. In his leisure time he can be found reading about cricket, performing street photography and cooking some delicious food.
