While opening a bank account or applying for a loan, you must have gone through the process of completing your KYC aka Know your Customer formalities. There is no doubt that KYC is an important step in the customer onboarding, as far as the banks and other NBFCs are concerned. However, with the world living in uncertain times amidst the COVID-19 pandemic, governments across the globe have issued advisories and guidelines for people to maintain social distancing and avoid gathering in public places.
What Does this mean for the Banking Sector?
Well, for once, they can easily say goodbye to the conventional ways of transacting and going about their activities. They need to get accustomed to this new normal where its time to think of alternatives. The good news is that we are observing the digital transformation of the BFSI sector where technology is playing a huge role. One such example is the use of video as a channel to conduct the KYC process.
Video KYC: Definition and its Impact
As the name suggests, Video KYC refers to using video chat or video as a channel to conduct KYC verification. In this scenario, for instance, the customer goes to the bank’s website and schedule their Video KYC appointment. The bank official is notified and the customer is sent a link to the video call over an email or SMS. Both, the customer and bank official join the call on the designated date and time. The bank official verifies the identification documents and address proofs and asks other questions for authentication purposes. Once done, the recording is transferred to the auditor for final check and approval. The customer is notified when her/his KYC is done.
Impact of Video KYC
With the world experiencing a pandemic like COVID-19, we can expect to see the fundamentals of banking changing in the months and possibly years to come. Video as a channel and Video KYC will become an important component of the banking experience.
1. Reduced Manpower
With Video KYC gaining prominence and people maintaining social distancing, we can expect to see a decrease in the number of field agents required to complete the KYC process. Unlike earlier, now customers and prospects have the option to do everything virtually. This not only saves their time but also can be done from the safety of their homes.
2. Cost Reduction
Fewer field agents, fewer customers in the branches means less operating cost as well as reduced cost of hiring. Moreover, since the time taken to complete video call KYC is much less, it translates into an overall reduction in infrastructure costs as well as any overheads involved.
3. Higher Completion Rate
Since now, the customer identification procedure calls for less time and effort we can hope to see more people completing their KYC. In effect, this will lead to a change from unbanked towards the banked population as more people will now have access to the banking facility even in geographies where doing home visits is not a feasible solution.
4. Lower Dropoffs
Conventionally, KYC completion used to take a few days to a week. This delay and the hassle involved in getting the documents photocopied, submitting them at the branch, etc led to many people avoiding it. However, with Video KYC this number is expected to drop significantly as now people can do everything digitally – KYC is just a video call away!
The year 2020 has been a roller coaster in many ways. However, even in these trying times, we have seen the world come together to fight this pandemic and the financial sector has to lead from the forefront. With this thought, we should gear up to see the world adapt to this new normal with digital transformation in the BFSI paving the path to a new way of banking. Video KYC is one such step in that direction.
Shambhavi Sinha is a technical blogger & Product Marketer and has been writing for 3 years. She is into technology and writes tech-based stuff. Her aim is to provide knowledge to users by sharing tips and tricks about new technologies, DIY, knowledge about contact center and Video KYC and more.