The new mandate to conduct KYC over video helps bring down costs for digital wallets and banks provided they are able to use it well
When the Reserve Bank of India (RBI) had announced that it was mandatory for all wallet companies to conduct KYC of customers, many in the segment had protested as the cost of doing so was quite high and a huge number of staff had to be deployed in order to complete this process. But now, years into the process, RBI has tweaked rules for KYC verification in keeping with the digital age. The central bank has announced that companies can verify customer details over a video and that shall serve the purpose of verification. While this will undoubtedly save costs for companies, it shall also serve as a convenience for customers.
The process that RBI has entailed is simple: the company would have to keep a timestamp of the video, while the customer will be asked to show the documents over the video and enable location so as to geo-tag the process. While this sounds easy, what is not clear as how the video is to be recorded. Early reports suggest that companies can use Google’s video chat (Duo) to do this, but nothing has been finalised.
Sunil Khosla, head-Digital Business, India Transact Services Ltd (ITSL), however holds a different opinion. He believes that the government over time may develop its own app, which allows all these features. He also says that the process is to bring down costs drastically.
But there are apprehensions too. At present, a representative can do this job, but once video KYC starts it shall require each customer to have a DigiLocker account for the video and other verification to be saved. This may not be an issue for the younger generation and those in urban centres. But given how cumbersome the process of opening a DigiLocker can be, it may not be that easy in rural areas. So, the government needs to ensure that this can be done easily.
But as the service takes over, it will certainly help companies open accounts and verify customers. More so, as sharing of documents can be done using DigiLocker.
So, if a customer were doing KYC the process would be simple. Open a DigiLocker account, link it to the government’s video service, or Google Duo, whichever is mandated by RBI. Keep your location services on and make sure your picture and document are clear when using video. DigiLocker linking and video KYC can certainly be a first step towards e-verification. If successful, the government can surely extend it to other services.