As mentioned in the previous blogs eKYC is one of the process which has been digitized in order to make it efficient and user friendly. Today eKYC also helps the banks in achieving the goal of customer acquisition. It establishes the relationship between the bank and its customer which may encourage the costumer to opt for banks other offers.

Banking is undergoing a paradigm shift. Digital/Mobile Banking and launch of Virtual Banks are revolutionising the industry, regulatory framework and Bank-Customer relationships. Banks are increasing adopting newer technology solutions to manage costs and achieve operational efficiency amid a rapidly evolving and increasingly competitive landscape.

KYC has become increasingly critical for banks to comply worth Regulatory Norms like AML, FATF. eKYC is one of the key process which has been digitized to make it efficient, user friendly and as an ongoing customer engagement tool.

eKYC also helps the banks in achieving the goal of customer acquisition and upselling to existing customers. According to a survey38% of banking industry customers claim that user experience is the most important criterion in choosing an appropriate bank.

In the post Covid era, where customers would likely prefer less contact and maintain social distancing; eKYC has become a must as it streamlines the process while focusing attention on due diligence and bringing operational efficiency

Banks need to ensure compliance with local and regional laws while also ensuring that customers have a smooth onboarding experience which is also financially feasible. Unfortunately, global data and compliance regulations are not harmonized, which is a cause of difficulties in implementing an eKYC system.

As per a research report:

Nearly $26 billion in fines were imposed against financial institutions for non-compliance with AML and KYC regulations
12 of the world’s top 50 banks were fined for non-compliance with AML, KYC and sanctions violations in 2019
Three out of five banks in Asia-Pacific still do not have digital account opening for new customers, according to a survey of 20 chief risk officers from across Asia-Pacific (FICO, April 2019). Respondents cited the region’s changing regulations (28%) and the need to create digital KYC/AML solutions (21%) as the biggest challenges they had in terms of acquiring customers.
This arises the need for an eKYC system which is both generic and customizable in accordance to the changes in regulations and laws while also balancing user friendliness with cost effectiveness. Few potential use cases could be:

Self- OnBoarding & KYC:
Through a Mobile App, interested customers can perform self-onboarding by providing requisite details, taking self-image in comfort of their homes and at choice of their time. This significantly increases the ease of use and higher chances of acquiring customers.
Where available, the regulatory identity documents of customer can be read through Scan, Photo or NFC for authentication to comply with KYC norms

Video KYC
Customer provides basic details online or through an App.
They then dial in through an APP or link provided by the Bank to answer few queries and record a video which to prove their identity and liveness.

On-Field KYC
Customer provides basic details through online means and based on this bank issues preliminary membership/document which are couriered to customer. At the time of delivery, the KYC is done either through document check or biometric (fingerprint, facial etc) verification is done against available regulatory database.