One of the fundamental pillars of survival is adaptability. Our resilience makes us thrive in changing environments. The current coronavirus pandemic has led to a higher degree of change in the way business transactions are done, and the new normal is dominated by digital transformation across industries.
The banking and finance industry is also witnessing a sea-change in terms of deployment and use of technology to find substitutes to human-to-human contact in different processes. There has been an uptick in digital adoption in lending and other banking processes, however the pandemic has necessitated further innovations.
One of the basic requirements for any financial platform is to meet the KYC (Know Your Customer) regulations. In April 2018, the Reserve Bank of India (RBI) made it mandatory to link the customers' Aadhaar identification numbers to their accounts, as part of the KYC norms. All regulatory bodies mandated the need for KYC, from banking accounts to mutual funds and many others.
While online savings accounts have existed for a while, the customers had to undergo KYC verification by visiting a bank branch or having a bank representative visit their residence. Without completing this process, the customer would be restricted to carry out transactions only up to a certain threshold. But the lockdown and social distancing norms, imposed by the government in late March to curb the spread of COVID-19, took away these options.
However, COVID-19 has enabled a leap towards a new era. This year, the RBI decided to allow companies to onboard customers remotely via video calls, thus filling the last-mile gap in digital adoption.
The process of video KYC has been introduced and has provided accessibility of a full-power digital account by eliminating the need for the customer to visit a bank branch. This will help customers access diversified financial services such as setting up a fixed or recurring deposit, investing in a mutual fund or systematic investment plan, buying an insurance policy, applying for a loan or credit card, and even paying a bills -- all through digital channels.
While abiding by certain guidelines set by the RBI, the video KYC facility will now allow officials to remotely verify the customer's identity using their Aadhaar card and PAN card. This ingenious use of technology makes it possible to digitally open an account instantly without visiting a bank branch.
As a result of the precautionary measures, the need for digital accounts has been emerging as a necessity for a large segment of people - starting from parents, who need to pay their children's school fees, to merchants, substituting cash-on-delivery with digital payment from the customer. Digital access will also help the elderly keep a check on their account balance and pension funds.
The process of onboarding through video KYC, in turn, will give the stage to financial service providers to create an impression in the minds of their customers.
The process of video verification will be beneficial in many ways for both the end-customer and the provider. There will be a decrease in the cost of services which the service provider had to bear due to large dependency on their feet-on-street presence. The virtual process enables better customer experience, eliminating the need of face-to-face interaction for verification, and, thus, leading to a lesser turnaround time.
The system of customer and process transformations has always been interdependent. Video KYC and digital accounts are futuristic tools to provide ease to customers - now and in the long run, hence changing the customer preference pattern.
(Sameer Shetty is Head-Digital Banking at Axis Bank)
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.
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