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How VCIP Digital KYC Solutions Have Empowered Banks and Financial Institutions?

VCIP or Video-based Customer Identification Process has helped power India into the next level of digital advancement in finance. RBI has approved video-based KYC that allows financial institutions to quickly onboard and authenticate remote customers by leveraging technology. The VCIP is expected to simplify customer authentication for banks, Fintechs, e-wallet providers and NBFCs. They can verify customers from any location, reduce manual efforts in reviewing vast volumes of data, and reduce costs. This blog talks about how Video KYC and VCIP has greatly simplified several processes for banks and financial houses globally.

What is VCIP?

As a path-breaking move, the RBI issued a notification in 2020 of officially recognising the VCIP as an acceptable customer identification method. All banks and regulated entities can collect KYC information from customers and conduct entirely digitised and isolated authentication.    

Video-based Customer Identification Procedure or VCIP is a real-time, seamless, and end-to-end encrypted procedure introduced by the RBI for paperless KYC verification and digital customer identification. Banks and regulated entities adopt this alternate video-based method via officially trained staff to perform face-to-face VCIP. The main steps involved in the VCIP process are:

  • Audio-visual interactions with Question/Answer sessions
  • Live photo and PAN image capture 
  • Facial matching and image data validation
  • E Sign solutions to enable digital signature
  • Geo-tagging feature to identify the exact customer location

Key Features of Video KYC and VCIP

The erstwhile method of digital Aadhaar-based KYC verification that involved capturing customer photos in real-time to verify his Aadhaar was not fully-proof, practical and applied huge costs for every KYC transaction.

The new VCIP or video-based KYC method involves a video call between the customer and staff from the financial institution to onboard the customer. Given below are the critical features of VCIP are:

  • Only banks can perform Aadhaar authentication online

RBI has clearly stated that only banks can authenticate customers’ Aadhaar details either online or offline via eKYC and QR codes. The QR code must have been generated not more than three days before the VCIP is performed. Registered institutions other than banks can utilise offline methods to authenticate a customer’s Aadhaar.  

  • There must be trained staff to perform VCIP

Banks must take care that the team performing VCIP are properly trained. The credentials and activity log of the officials must be maintained and updated.

  • VCIP must be initiated from the domain of the bank or financial institution

The procedure of VCIP must be initiated from the domain of the financial entity performing the Video KYC. The financial institution performing VCIP must ensure that the customer is present on the entity domain while initiating the call.

  • The VCIP process must be concurrently audited

RBI’s mandate is that a concurrent audit process must be in place for every VCIP done. An account created using VCIP can become active only with a simultaneous audit and onboarding.  

  • Video-based interaction must be recorded for future access

The video-based interaction between the customer and the bank’s staff may be recorded with timestamps for future records. This information must be maintained safely and securely, and an official must confirm that it is not a pre-recorded video before approving the KYC.

  • VCIP must be secure and seamless

RBI has also mandated that the VCIP process must be real-time, seamless, safe, and end-to-end encrypted. Additionally, the quality of the video interaction must be good enough to ensure accurate identification of the customer.

  • VCIP can be enhanced by AI technology

RBI also encourages banks to leverage the latest AI technology to enhance the VCIP process and offer an easy-to-use onboarding process for their customers. The financial institutions must perform validations and security audits on the VCIPS before implementing it.

  • VCIP is entirely paperless and digital

As envisioned by the RBI, VCIP is meant to replace paper usage completely. This enables financial institutions to considerably reduce onboarding costs, turnaround time, instant document verification and no physical interaction. 

Conclusion

VCIP or video-based KYC is a cost-effective, straightforward, safe and robust customer onboarding solution that can prove to be a big game-changer for banks and financial institutions in the future. 

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