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e-KYC can aid the financial institutions to reduce their operational expenses and generate profits from low-income customers as well.
FREMONT, CA: Financial service providers must identify their customers and calculate the risks they pose before offering services. This puts two constraints on financial inclusion. On the supply side, costly customer identification and due diligence procedures can make low-income customers unprofitable for the firms, and on the demand side, inconvenient or lengthy onboarding processes can deter customers from opting up for financial services. Here, electronic-KYC acts as a savior, which makes it simpler for financial service providers to take on new customers.
e-KYC systems can enhance the onboarding process by minimizing or eliminating paper-based procedures as well as record-keeping, which reduces costs and time spent on customer verification, and rendering it more profitable to offer services to low-income customers. For the e-KYC process to be profitable, it must be complemented by a digital ID infrastructure. This collection of digitally recorded identity uniquely describes a person within a particular context and can be leveraged for electronic transactions.
As financial activities have migrated online and become increasingly adaptable by mobile devices, e-KYC platforms have gained the essence to accessing financial services and an essential element of the present financial service landscape. e-KYC enables customers to electronically provide their personal and demographic information—such as proof of identity to financial service providers, who can verify it in real-time. Such initiatives will help firms to expand in rural and remote areas, along with expansion in urban areas.
In the offline approach, the KYC process would be completed by financial institutions in five-seven working days. e-KYC reduces the time required and saves time, money, and manpower needed for the verification process. e-KYC is a cost-effective alternative for financial service providers. The e-KYC system is focused on advancing a person's access to financial services, offset identity fraud, and enhance financial inclusion. Due to the above potentials, e-KYC is all set to open a new chapter in the finance sector.
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