Opening a bank account has now been simplified, thanks to advanced technology. To further digitalization in banking processes, (Reserve Bank of India) in its recent mandate allowed banks to verify the identity of their customers using artificial intelligence and facial recognition technology over a video call.
Individuals that wish to open a bank account online can now complete their KYC (Know Your Customer) procedure without the need to physically visit a branch.
In a notification dated 9 January 2020 RBI said, "with a view to leveraging the digital channels for Customer Identification Process (CIP) by Regulated Entities (REs), the Reserve Bank has decided to permit Video based Customer Identification Process (V-CIP) as a consent based alternate method of establishing the customer's identity, for customer onboarding."
How does it work?
The Video based Customer Identification Process, in simple words, allows banks to verify customer's facial identity and other documents of identification proof over a recorded video call. Customer can show documents that they possess over the audio visual interaction which will be considered as a face-to-face interview.
- For the process, banks will have to seek consent from the customer to establish identity and for onboarding.
- Customers will have to display their PAN card or the proof of possession of Aadhaar. If the individual has an equivalent e-document, like e-PAN, that was issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account, they will not require to display physical documents on the video call.
- An authorised officer of the bank will capture the live photo of the customer along with the latitude and longitude of the location where such live photo is being taken.
- After performing the Video-based Customer Identification Process, where the video, as well as, capture photograph of the customer present for identification is obtained:
For Aadhaar verification:
Banks can use either OTP based Aadhaar e-KYC authentication or Offline Verification of Aadhaar for identification. Banks can also use services of Business Correspondents (BCs) for aiding the V-CIP.
Entities other than banks can only carry out Offline Verification of Aadhaar for identification.
For PAN verification:
In cases, where PAN Card is displayed by the customers during the video chat, the official will capture a clear image of the card from the video to verify from the issuing authority.
- The live location of the customer is captured using Geotagging to ensure that the customer is physically present in India.
- The interviewing authority will have to make sure that the sequence and/or type of questions during video interactions are varied in order to establish that the interactions are real-time and not pre-recorded.
- For security, robustness and end to end encryption of the video interaction, the entities will have to carry out software and security audit and validation of the V-CIP application before rolling it out.
- Banks have to ensure that the video recording is stored in a safe and secure manner and bears the date and time stamp.
At present, RBI has not released information on which app can be used for the video chat, however, it is unlikely that it would agree on third-party apps like Google Duo or Apple FaceTime as the data protection Bill does not allow companies to store customer data in external locations.
The Video KYC like other e-KYC procedures is hoped to save costs of banks and other financial institutions. It is also hoped to reduce the verification process by 5 days to 1 day or less.
Valid KYC verification is mandatory for customers as per RBI guidelines if they wish to gain full access to all the banking and other financial services.