The electronic know-your-customer (e-KYC) process would be a boon for the banking and financial services industry.
FREMONT, CA: Financial service providers have a responsibility to identify their customers and understand the risks they pose before providing services. This imposes two constraints on financial inclusion. On the supply side, expensive customer identification and due diligence procedures can render low-income customers unprofitable, and on the demand side, lengthy or inconvenient onboarding procedures can deter customers from signing up for financial services. Here, electronic-KYC acts as a promising approach, which makes it easier for financial service providers to take on new customers.
e-KYC systems can improve the banking onboarding process by reducing or eliminating paper-based procedures and record-keeping, which lessens costs and time spent on customer verification, and making it more profitable to provide services to low-income customers. For the e-KYC process to be effective, it must be armed by a digital ID infrastructure. This collection of digitally stored identity uniquely describes a person within a given context and can be used for electronic transactions.
As online activity has migrated online and become increasingly mediated by mobile devices, e-KYC platforms have become increasingly important to accessing financial services and an essential element of the modern financial service landscape. e-KYC allows customers to electronically provide their demographic and personal information—including proof of identity to financial service providers, who can verify it in real-time. This initiative will help banks like to expand in rural and un-banked areas, along with expansion in urban areas.
In the offline method, the KYC process would be completed by banks in five-seven working days. e-KYC reduces the time taken and saves time, money, and manpower required for the verification process. e-KYC is a very cost-effective move for financial service providers. The e-KYC systems aim to advance a person's access to financial services, reduce identity fraud, and increase financial inclusion. Given that, e-KYC is all set to open a new chapter in the modern banking industry.
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