The Reserve Bank has always tried to remain adaptable in changing times. Its directive to utilize a video-based customer identification process(V-CIP) for know your customer (KYC) procedures is the latest evidence for this. The announcement came as an amendment in its master direction on the 10th of May 2021.
V-CIP utilizes facial recognition technology to identify the customer. It can also include an authorised official from the regulated entity (usually an RM) performing the live customer due diligence with informed consent for verification. This is far more convenient, secure, and seamless since the whole process is an audio-visual interaction between the RM and the customer.
What Is The RBI’s Directive?
The Reserve Bank stipulates regulated entities(RE) to use V-CIP in Customer Due Diligence(CDD) for:
- New individual customer onboarding.
- Proprietors(Proprietorship Firms)
- Beneficial Owners(BOs) and authorised signatories among legal entity customers.
The directive is also for other RBI regulated entities including banks, payment system operators and NBFCs. Updation of KYC for existing customers and customers who had opened accounts through non-face-to-face modes( Using Aadhar OTP based e-KYC verification) is also to be done with V-CIP.
The RBI provides guidelines for a minimum standard for all REs to maintain baseline cybersecurity for banks and financial institutions. These include them:
- House all technology infrastructure in the RE’s premises.
- Use secured network domains for V-CIP connection origins.
- Ensure all outsourcing of technology associated with the process to be compliant with respective RBI guidelines.
- Maintain end-to-end encryption of information between V-CIP hosting point and customer’s device.
- Obtain auditable and alteration proof customer consent.
- Create a transparent workflow and SOP(standard operating procedure) for all V-CIP related processing.
REs should appoint specially trained officials for operating the V-CIP process. These officials would record audio-video and obtain photographs(mostly real-time) of customers whose identification is to be verified.
These officials can obtain the customer identification information with an Offline or OTP based Aadhaar e-KYC verification. They can also retrieve the required information from CKYCR or equivalent OVD e-document repository through DigiLocker.
How Will It Impact The Sector?
Many financial institutions have already taken up V-CIP as an additional armour of protection against fraudsters and scammers. The RBI’s amendment of the master direction will further encourage more institutions and REs to adopt V-CIP. The usually hesitant players will adopt this mode of technology for their benefit. Even the traditionally slow to adapt government sector banks and NBFCs will also follow suit.
The change would not only affect the REs and institutions, but also the customers in a rather positive fashion. With the pandemic looming over the country, every individual desire to be safe and avoid all in-person interactions. With this directive, the REs and financial institutions are compelled to help solve this issue. With remote V-CIP methods, all customers will be at zero health risk.
Additionally, no customer prefers the extra time commuting and the plethora of documentation formalities that may follow in legacy systems of CDD. V-CIP makes the journey easier, preferable and convenient for the customer, all while saving the REs and their employees time and resources.
But it is important to be aware of how REs avail V-CIP services from Regtech firms. When it comes to such crucial aspects it is always safe to bet on reliable and supportive companies for assistance.
Signzy is a ‘no-code AI platform’ for financial services. No matter how complex a workflow or an operation, Signzy can completely automate the back-office operations and decision-making processes into a real-time API. Signzy’s pantheon of V-CIP related products is efficient and reliable to another class.
Some of the features Signzy’s V-CIP and Video KYC products have are:
- Real-time OVD verification
- Matching face on ID with face in the video (with % confidence score)
- Unlimited video storage and instant retrieval
- Geo-location capture and IP check
- End-to-end encryption for video, channel, and communication
- Video forensics for pre-recorded risk and spoof detection
- Digital forgery check on the displayed ID proof
- Customer identity verification through offline Aadhaar XML
- Seamless and interactive UI for live video interaction
- Timestamp and audit trail for every application and video interaction
Signzy’s V-CIP services and products are 100% in compliance with all the RBI regulatory guidelines and directives. This is essential as all REs are supervised for the right compliance practices and Signzy offers to negate all possible complications. Signzy’s solutions are easy to use with immediate responses which make it fast and efficient.
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
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Written by an insightful Signzian intent on learning and sharing knowledge.