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    DigiKYC

    What is KYC?

    KYC stands for "Know Your Customer." It is required by businesses, particularly financial institutions (FIs), to verify and gather information about their customers' identities and assess the risks associated with providing services to them. The KYC process is essential to preventing money laundering, terrorist financing, and other financial crimes.

    The primary objectives of KYC are:

    1. Identity Verification: Ensuring that the customer's identity is genuine and not fraudulent
    2. Risk Assessment: Evaluating the potential risks associated with serving a particular customer based on their background, financial activities, and location
    3. Regulatory Compliance: Meeting the legal and regulatory requirements set by government authorities to prevent financial crimes and ensure the integrity of financial systems

    Stages in the KYC process

    1. Customer Identification: The first stage involves collecting basic information about the customer, i.e., the customer's name, date of birth, address, contact information, and occupation.
    2. Document Verification: Next, the customer is required to provide valid identification documents to establish their identity. Commonly accepted documents include passports, driver's licenses, Aadhaar, voter ID, and other government-issued identity proofs.
    3. Address Verification: The customer's address is verified using documents such as utility bills, bank statements, or other official documents that show the customer's current proof of address.
    4. In-Person Verification (IPV): For certain types of accounts or transactions, especially those involving higher risk, financial institutions may conduct an in-person verification of the customer. This can be done through a physical visit to the branch or via video-based KYC for remote verification.
    5. Bank account verification: For certain usecases, bank account of the concerned individual is verified and validated via a simple penny drop test onto his/her bank account.

    Types of KYC

    1. Physical KYC

    It requires a customer to be physically present at the bank or financial institution (FI) at the time of verification. The customer submits self-attested copies of proof of identity (POI) and proof of address (POA) for KYC. This had been the process before developing eKYC as a service.

    2. Aadhaar eKYC

    It uses Aadhaar data stored with the Unique Identification Authority of India (UIDAI), the issuing entity, to verify the identity of a customer. Aadhaar eKYC can be done in two ways: online and offline.

    • Online Aadhaar eKYC can be OTP-based or biometric (retina or fingerprint-based).
    • Offline eKYC (oKYC) can be done using an Aadhaar XML file available on the UIDAI portal or by scanning the QR code on the back of an Aadhaar card. The dependence on UIDAI becomes a challenge since the portals response time for the XML file is high and the downtime of the portal can be an issue, hence this is not a widely adopted service

    3. Digital KYC

    It’s a paperless version of KYC. During digital KYC, the RBI requires an official representative (REP) to be physically present with the customer at the time of verification. The REP captures ‘live’ images of the customer and their officially valid documents. These images need to be further geotagged.

    The data captured from the images is then verified against the data in the customer’s application.

    4. Video KYC

    A video KYC process consists of two stages – the video call and the review.

    • In the first stage, an official representative(agent) captures the customer’s PoI and PoA over a video call.
      • POI: Proof of identity
      • POA: Proof of address
    • The second stage involves a review of the video call by another representative.

    5. CKYC

    Central KYC, or cKYC, involves a FI using the customer’s KIN (KYC Identification Number) to access their documents from the central KYC registry (CKYCR).

    It is a centralised depository of customer documents who are looking to avail various services in financial sector.

    Customers needed to submit their KYC document each time they would want to create a financial relation with a institution like lending, banking, mutual fund houses etc

    But CKYC helps to eliminate the friction by streamlining the documentation process which was cumbersome before.

    Services/APIs offered by Digio

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