Authored by Lead Consultant, Banking Solutions at N-able, Shermin Pietersz , highlighting the importance of a key transformational technology for the BFSI industry.

Knowing who your customer is and enacting protocols to prevent financial crime are ongoing challenges for Financial Institutions. KYC (Know your customer) is a critical process for determining customer risk and whether the customer can meet the institution’s requirements to use their services.

It’s also a legal requirement to comply with Anti-Money Laundering (AML) laws. Financial institutions must ensure that clients are not engaging in criminal activities by using their services. All financial institutions must comply with the regulations for customer identity verification as per the guidelines provided by the Central Bank.

Video KYC procedure is an automated and video-based customer due diligence process involving digital KYC verification for the purposes of customer onboarding. Video KYC allows businesses to utilize document image capture, digital ID validation and face-to-face interaction with a trained official to digitize and expedite the KYC process.

Shanti Ekambaram, Group President-Consumer Banking, Kotak Mahindra Bank says, “Signing up new customers through video KYC can prove to be a game changer where customer verification is completed from the comfort of one’s home or office, without the need for a physical interaction.”

Difference Between KYC and AML (Anti Money Laundering) in Banking

Both KYC and AML share the same goal: to prevent the laundering of money through financial services institutions. However, AML is the broader collection of regulations to prevent money laundering, while KYC is a type of AML regulation that focuses solely on customer identification, verification, and screening.

To create and run an effective KYC process, the following elements are required:

1. Customer Identification Program (CIP): The customer is who they say they are
2. Customer Due Diligence (CDD): Assess the customer’s level of risk, including reviewing the beneficial owners of a company
3. Continuous monitoring: Check client transaction patterns and report suspicious activity on an ongoing basis

Video KYC, and how it is different from traditional KYC methods

Video KYC is the online process of face-to-face identification through a live video call. The call is assisted by a KYC agent and involves audio-visual interactions, facial matching, geo-tagging, and real-time automated document verification.

• It is entirely digital and involves zero paperwork, with scanned documents or images for verification over the internet.
• Involves audio-visual interactions to check the person's liveliness and face matching with the provided documents.
• The process of Video KYC uses the latest technology for the verification of documents in real-time, thus allowing for lesser errors in a quick time.

How to Do Video KYC

A customer’s KYC details are collected and verified typically before that customer can begin an account-based relationship with a regulated financial institution such as a bank, financial service provider, insurer, or securities intermediary.

These KYC verification procedures are a critical part of Customer Due Diligence (CDD), which are measures put in place to deter money laundering, fraud & the usage of funds to finance criminal activities. 

Industry Insights

According to the report published by Facts and Factors, the global Video KYC market was valued at approximately USD 154.3 Million in 2019 and is expected to generate revenue of around USD 500 Million by the end of 2026, growing at a Compound Annual Growth Rate (CAGR) of around 14.9% between 2020 and 2026. 

Global Video KYC Market: Regions

The Global Video KYC market is segmented based on regional analysis into five major regions. These include North America, Latin America, Europe, Asia Pacific, the Middle East, and Africa.

Must-Have Video KYC Features

Video KYC stands out from other KYC verification protocols such as eKYC or digital KYC due to its incorporation of video-enabled features, audio-visual interactions, facial matching capabilities & the all-around usage of AI technology to streamline & expedite the KYC verification process.

Benefits of Video KYC Solution in the Contactless World

Massive reductions in onboarding & KYC expenses

Video KYC, in particular, has been shown to reduce onboarding costs by 90%, due to the digital nature of the process, the absence of paperwork & the utilization of automated verification methods. 

Shortened turnaround times

The total duration of a KYC verification process that isn’t digitized can stretch from 5 to 7 days. Video KYC demonstrably reduces the turnaround time for KYC verification by automating the validation process, instantly verifying KYC details & digitizing the documentation involved. Video-based KYC verification procedures have been shown to reduce TAT from 7 days to within 10 minutes. 

Increased productivity & fewer documentation errors

Video KYC boosts worker productivity by removing the inefficiencies associated with paper-based documents & manual workflows. 

Seamless onboarding journey with fewer drop-offs

Previous paper-based KYC procedures were often too fragmented & slow, resulting in about 40% of customers abandoning the KYC verification process. 

Video KYC ensures a smooth & seamless onboarding process for customers by making the process entirely digital & automated, which is directly in line with customer demands, since more customers prefer a digital method of identity verification. 

Safety and Security are prioritized 

Fraud, cyber-crimes & money laundering have been huge problems for FIs and were the primary reason for instituting KYC norms in the first place. 

Video KYC solves all these problems by incorporating strong security protocols, ML-powered filters, data security measures & a completely digital workflow for remote & presence-less KYC verification. 

N-able Support

VKYC is an integral part of the customer onboarding process for all the banks, NBFC, and other financial institutions and organizations under the supervision of the Central Bank of Sri Lanka.

N-able is already working with various solution providers to turn these requirements into business opportunities. With expertise in banking applications and software development and more, N-able is the best partner in delivering customized VKYC solutions.