eKYC or Digital KYC – Concept, Scope, Application, Process, Benefits & more

Know everything about eKYC or Digital KYC here. Find details like its Concept, Scope, Processes, Benefits, Application, Drawbacks & more.

Lets get Started & understand the entire process of Electronic KYC here.

About eKYC

The process of noticing a customer avoids crime in any transaction of finance, when it is lawfully with a Bank or Non-Bank Financial Company, is referred to as Know Your Customer or KYC.

When the KYC takes place with the online procedure and digital or electronic method then it is the eKYC.

Through the Aadhaar card, the electronic KYC happens where the customer’s address and individuality are in check via the customer’s Aadhaar card.

eKYC is a digital procedure and is possible to complete from anywhere and without any paperwork. It also reduces the cost and the need to visit the office regularly.

About Aadhaar Card

This card is a 12 digit number which the Unique Identification Authority of India or UIDAI issues to all the citizens of India after taking a few verification processes.

Aadhaar card lets you relish many activities without worrying about the other documents. Any Indian citizen can apply for an Aadhaar card regardless of age and gender.

It provides the citizen with important authentication, individuality, financial data, etc. One will need only biometric data at the time of processing for the Aadhaar card.

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Scope of eKYC or Digital KYC

Aadhaar card is a one-time issued number to Indian citizens which is valid for a lifetime. Any Indian citizen can get an Aadhaar card.

The process of making an Aadhaar card is free and owning an Aadhaar card can provide you many advantages such as identity proof, address proof, and many more.

It is also a way to avoid any fake identities and provide you with the identity of uniqueness. In turn, it helps the government to keep a check on all its citizens.

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Modification from Offline KYC to eKYC

Digitalization has taken an extreme shift in the last few years. With the change of era, many companies especially banks and other financial institutes are taking advantage of digitization.

Traditional KYC is different from eKYC in the sense that eKYC is fast, cheaper, and requires less paperwork than offline KYC.

The basic difference between Offline KYC and Digital KYC is that traditional KYC does not have access to UIDAI. It belongs to the XML file procedure.

In 2018, the Supreme Court prohibited the use of eKYC by private institutions. UIDAI proposed the use of an offline Aadhaar card to verify their Online KYC.

Offline Aadhaar card enables people to provide their correct information with companies. There are two ways of doing Online KYC, namely, QR code and offline Aadhar XML.

Several companies are finding it difficult to switch from the traditional KYC method to Digital KYC.

Some technology industries come to a rise where the process becomes easier by trying machine learning as well as artificial intelligence to adapt and reduce the electronic processes.

In offline Aadhaar XML, the customer should go to the UIDAI website and then for getting access to the password, the customer will get an OTP. A digital signature provides the company to verify the customer.

The XML package will contain the download reference number, gender, name, photo, address, D.O.B, email address, and contact number.

This package is then provided to the company that is going to KYC the customer.

eKYC Application

eKYC is necessary for all customers, financial companies, Bank officials, service providers, etc.

RBI administered two crucial circulars which were issued in 2003 and 2004 for financial companies and banks to provide the service of eKYC for both new as well as existing customers.

Applicability of Digital KYC are as follows:

1. Financial company
2. Post offices
3. Aadhaar
4. Banks
5. FI’s situated abroad Mobile Service Providers
6. Telecom Utility connections such as electricity, water, and gas
7. Few apps of financial companies which require to transfer Rs.20,000 per month. One such app is PayTM

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Benefits of eKYC

Electronic has always got many advantages over offline things. Some advantages are basic and some are very essential in the digital era.

eKYC lets the customer enjoy the opportunity to carry less or no paperwork for identification.

Other pros of Online KYC include:

1. eKYC is cost free which means the agent or Bank official will not charge you a rupee for doing KYC.
2. The agents are allowed to use the biometric scanner which is approved only by UIDAI and only agents verified by UIDAI are allowed to use KYC based on Aadhaar. Therefore, the safety of the process of Digital KYC is maintained.
3. It is done at no time and is verified quickly.
4. It abolishes any fraud activity and thefts.

Drawbacks of eKYC

There are fewer disadvantages of eKYC but the main con of Digital KYC includes that the company who stores the information of customers can later misuse it and can lead to serious problems in the future.

Process involved in eKYC

The aim of eKYC is to verify the identity of the customer through an online process and not with the old way of doing KYC with a lot of paperwork.

Online KYC uses the details on traditional Aadhaar to verify the customer’s identity.

Also, any company who wants to ensure the identity of its customer can do their eKYC for doing the verification of customers.

Only an Aadhaar card and mobile number should be present to make this process happen.

Thus, it saves time for the process and does not require bringing bundles of documents for verification.

• Banks and other agencies give the service of Digital KYC to a customer.
• One must avail Aadhaar card because for now, the customer who holds the Aadhaar card can only use the feature of Digital KYC.
• The process of Online KYC is very simple. Any company can do this process hassle-free. Besides, the first step involved would be to verify the customer when he or she reaches the agent for doing eKYC.

Step by Step process in eKYC

Follow these steps to know about the eKYC process:

1. Firstly, the Aadhar card is for the Bank official or service provider agent and then they note down the Aadhaar number.
2. Secondly, the fingerprint process happens via a biometric scanner. Sometimes, the test requires retinal images instead of a fingerprint. But fingerprints are more popular than retinal images. OTP is available as a method of authentication.
3. Then, UIDAI considers all these values through protected servers.
4. After this, the value stored in the database of that Aadhaar number is cross-checked with the biometric value given at that time.
5. When the values match then the customer identity is not questioned.
6. Lastly, UIDAI will disclose his or her credentials such as an address, D.O.B, photo, and other things to the agent which in turn reduces the need to carry a bunch of documents with them at the time of verification. The company can also save a soft copy of all the details in their server through the UIDAI to let the company access the customer’s information whenever needed.

Way to Access eKYC

The customer who owes his or her Aadhaar card is eligible to access the eKYC database by following these steps:

1. Search https://uidai.gov.in/
2. Download Digital KYC from this website
3. Fill the downloaded form correctly and click on the submit option
4. After following these processes you will be able to attain the information as an XML file which will be available to sign digitally by the UIDAI authority.

Conclusion – eKYC or Digital KYC

When the world is transforming into digital solutions, you too must not be held back in this process.

eKYC also makes the process of Know Your Customer easier by letting the customer verify himself through the process of digitization.

Digital KYC will also let the customer save their time of carrying heavy documents that are essential to give identity proof.

Besides, it has many benefits from traditional KYC which will contribute to customers in making the verification process easy as well as quick.

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