Times have changed to the point that today almost all operations related to finance have been digitized. The financial sector has particularly benefited from this transformation. eKYC, or electronic KYC, has made it possible for people to access loans online easily without going through the traditional KYC process, which requires much documentation.
eKYC as compared to KYC
eKYC is an acronym that expands to ‘electronic know your customer’ as against KYC, which stands for ‘know your customer’. All these are ways of obtaining customers’ personal details and professional information. The difference between these two is that one is conducted online while the other is carried out manually.
eKYC can be defined as an online system where users are registered by providing personal and professional information. The registration process is done by using your Aadhaar card. KYC, whether manual or online, is important because it prevents instances of money laundering and other illegal activities.
Changing from KYC to eKYC has a lot of benefits for any financial institution as well as its clients. Discussed as follows are some of the benefits –
Reduction of cost – eKYC is cheaper compared to KYC. It eliminates the need to employ more representatives who will handle the KYC process by doing the necessary documentation manually. The cost of buying inventories is also reduced as most of the documentation is digital. eKYC can be done throughout the day and on all days of the week, and this means you do not have to travel to the bank’s premises. You can apply for loans from the comfort of your home. Even checking your Bajaj Finance loan application status can be done online.
It is secure – There have always been a lot of cases of loss of information or inaccurately filled forms when doing KYC. With eKYC, it is not the case. Issues of inaccurate data and loss of information have been eliminated as most of the information used has been verified and stored online.
It is paperless – Paperwork is tedious as there is so much documentation required by banking or financial lenders. It is also costly to buy the stationeries needed. eKYC has made it possible for banks to go paperless. This, in turn, has reduced the initial workload in banks, thus resulting in more efficient services to clients.
The process is faster – Manual KYC takes time. Clients have to go to the banking institutions to apply for loans physically. They are also required to give their information by filling out many forms. This means that the time taken to approve loans is also long, inconveniencing clients who are looking for emergency funds. eKYC does not require all this, and therefore it is faster. Loans are approved faster, and the time taken to travel to the banks is also eliminated.
What do you need to be eligible for eKYC?
Not everyone is eligible for eKYC. In India, the only requirement for eKYC is an Aadhaar number. If you do not have this card, then you are not eligible. An Aadhaar card is necessary for you to access electronic financial services.
You can get an Aadhaar card from the unique identification authority of India (UIDAI). This is done after getting authorization from government agencies. When getting your eKYC done, you will need an Aadhaar card and passport photographs. Other documents of proof such as a driver’s license and passport may also be required.
The eKYC process
The eKYC process is easier and faster than the traditional KYC, which takes a lot of time and resources. All you need is access to the internet and then visit a legitimate lender’s portal and register yourself. It is helpful when opening an account or applying for a loan.
You will be required to provide personal information during the registration process. Once this is done, you must enter your Aadhaar number before an OTP can be sent to your mobile number. After an OTP is sent to your mobile number, you will then be asked to submit all documents required for eKYC. It is therefore important to have the scanned documents before beginning the process.
After you have uploaded all the documents required, you will be prompted for verification through a video call by the site. The site representative will ask you a few questions to confirm your identity. You will then proceed to sign the document digitally. When done, wait for KRA’s approval. It may take some days.
Why eKYC is the future of know your customer
Many organizations, including financial institutions, have experienced digitization. This means that they are moving away from KYC to eKYC. It is the future as it comes with more advantages.
It is faster, secure and also cost-effective. With the current economic times where every company is looking for ways to cut costs, eKYC is the way to go. It requires fewer workers, and the cost of operations is also reduced as it is paperless.