Video KYC lets more customers open bank accounts from home4 min read . Updated: 07 Sep 2020, 10:44 PM IST
If you do eKYC, you need to regularize the account for full benefits, but that’s not so with video KYC
While banks, being an essential service, remained open even during the lockdown, many people became wary of visiting branches and turned to digital alternatives. “We have seen a healthy growth of around 40% in overall consumption of digital services like online fund transfers and bill payments through our mobile banking app," said Virat Diwanji, group president, retail liabilities and branch banking, Kotak Mahindra Bank.
Banks are fast adapting to this new reality, even for services, such as opening a bank account, that traditionally required customers to visit a bank. While some banks already had digital account opening options available, more are joining the bandwagon. The latest one is Axis Bank Ltd, which launched its Full Power Digital Savings Account on 31 August.
We take you through the basics of opening a digital savings account and what you can expect.
Banks are giving digital account opening a thrust. “In the April to June quarter, more than 212,000 digital savings accounts were opened. Keeping in mind the need of the hour, we launched the Full Power Digital Savings Account, which can be opened instantly with video KYC," said Sameer Shetty, head, digital banking, Axis Bank. The account also gives customers a virtual debit card, which they can use to start transacting immediately.
Remote account opening has the added advantage of not submitting physical documents, according to Adhil Shetty, CEO, BankBazaar. “They are ideal for anyone who would like to open a savings account as it lets you complete the formalities online and get an operational account in minutes," he said.
To open a bank account, digital or otherwise, a customer is required to complete the know your customer (KYC) formalities. It involves verification of the individual’s identity, address and other details.
eKYC: If you want to avoid going to the bank for the time being, eKYC is what you can look at for opening an account. “There are two types of digital accounts, opened via Aadhaar-based eKYC and full KYC. OTP-based eKYC can be seen as an intermediate step aimed at expediting the process of opening a loan or savings account," said Adhil Shetty.
While you will be able to open an account through eKYC, you’ll need to convert it to a regular one by completing the detailed KYC in a year’s time. If you fail to do so, the account will get frozen. There are other restrictions too. “The total amount in an account at a time can’t exceed ₹1 lakh and the total amount credited to the account in one financial year can’t exceed ₹2 lakh," said Adhil Shetty.
“The account opened is similar to the regular savings account, except for the cap on transaction limits. Post regularization, it is similar to any other savings account," he added.
Video KYC: To complete full KYC, you would typically require to visit a branch. But banks are easing up this requirement as well by replacing it with video KYC.
A major development aimed at facilitating the on-boarding of customers remotely came in January 2020, when the Reserve Bank of India (RBI) allowed lending institutions to use video-based customer identification process. It was a well-timed move, and banks started adopting this new facility in keeping with the times.
Axis Bank’s newest offering, like other digital accounts, only needs you to present your valid Aadhaar and permanent account number (PAN) cards to complete the video KYC process. “The eligibility criteria to open a digital savings account is that the person should be an Indian citizen, with a valid PAN and Aadhaar number and be at least 18 years of age. Also, a desktop, laptop or mobile device should be enabled with a camera and microphone facility for the video KYC process," said Sameer Shetty.
In May 2020, Kotak Mahindra Bank, which already had a full-service digital account called Kotak 811, introduced the video KYC facility. ICICI Bank, IDFC First Bank, IndusInd Bank and Yes Bank have also rolled it out.
According to Omkar Shirhatti, co-founder and CEO, Karza Technologies, since documents submitted during video KYC are submitted digitally, the bank’s IT infrastructure needs to be capable of securely storing and retrieving the customer’s information digitally. “The biggest task for banks is setting up a workforce and training agents to carry out video KYC. Based on regulations, during the video call, banks need to check if the customer is present in India and in real time, and verify identification details. The final decision-making lies with the agent conducting the process," he said.
Although bank authorities claim that eKYC and video KYC encryption ensures data privacy and security, according to Shirhatti, conducting KYC processes over a video call does involve data privacy risks since sensitive information and documents are being shared. “The major steps taken to ensure data privacy are data localization or ensuring all data processing and storage takes place within India; consent-driven design, which means browser and device-based permissions are requested at every stage before taking any technical access; and Aadhaar privacy for the customers," he said.
Banks are proactive in tackling the issue, but customer awareness is also important. “We have robust artificial intelligence and machine learning fraud detection tools built in to identify any security breaches. As a bank, we place strong emphasis on cyber security as well as educating our customers on practising safe banking behaviour online," said Diwanji.
Covid-19 has changed the way we bank, among other things. But even after the pandemic passes, digital savings account opening is likely to be the way forward, given the convenience it offers.