PFRDA | Kwik.ID

Prevent Identity Theft by Implementing Digital KYC

Identity theft happens when someone steals your personal information like Aadhar card number, PAN details, or credit card information to make an online purchase, access your financial accounts, create a new bank account, or commit any other type of fraud.

Identity thefts are far more common than you think. According to Norton Cyber Security Insights 2021, nearly 2.7 crore Indians were affected by identity threats in 2020 – that is, 45% of adult Indian internet users. With such high levels of risk, financial institutions need to re-evaluate their current KYC processes to reduce instances of fraud while engaging with new customers. As instances of fraud will see an upward trend, it is time for financial institutions to opt for secure Digital KYC processes in place of legacy practices.

Before we understand how to reduce risk, let us know how one becomes vulnerable to identity theft.

Unsecure and public browsing: For the most part, accessing the internet is safe. But, unsecured websites and public Wi-fi increase the risk of data, landing into hackers’ hands.
Data breach: A data breach is a security incident where sensitive information is accessed without authorisation. This year, personally identifiable information of 5,00,000 Indian police personnel was hacked into and put up for sale online, which was traced to a police exam conducted in December 2019.
Malware activity: Malwares are malicious programs that perform several functions like stealing, altering code, hijacking, deleting sensitive data, and encrypting.
Phishing: In this type of attack, a fraudulent communication appears to come from a reputable source, which, when clicked on, lands data in identity thieves’ hands.
Physical theft: Sometimes, losing a credit card or mobile phones makes data available at ease, to thieves.
Card skimming: In credit card skimming, thieves use a small device to steal payment card (credit card, debit card or ATM card) information. When the card is swiped through this device, it captures all the data from the card’s magnetic strip.

Digital KYC to Address Identity Theft

KYC (‘Know Your Customer’ or ‘Know Your Client’) is a process by which institutions verify the identities of their customers to gauge their identity and credibility. Banks, insurance companies and financial institutions heavily rely on KYC before opening a new account.

Identity verification with KYC mainly addresses identity theft. Despite RBI guidelines for KYC, forged documents and financial fraud continue to be a problem. Recently, in Delhi, a group of fraudsters cheated several popular banks and utilised 22 PAN cards, 9 Aadhar cards, and 21 voter ID cards for their operation.

The current KYC processes are heavily dependent on outsourced vendors and are susceptible to both customer and employee fraud. Kwik.ID provides both Digital and Video based KYC identification to address the issues that KYC processes currently face. Our Video KYC process is used for customer identification as mandated by RBI, SEBI, IRDAI, and PFRDA. The process uses end-to-end encryption for maximum data security and prevents your risk of breach or theft with an on-premises setup.

We verify all officially valid documents (OVD) like PAN, Aadhar, Driver’s License, and Voter ID card from the Central Government Database using our Digital KYC offering. Using Optical Character Recognition, our software recognises characters in ID documents within seconds. Besides incorporating security questions to verify details, AI-enabled image processing is an integral part of our Digital KYC process.

We establish identity consistency by comparing user images on selfies, institutional photographs, and photograph on official ID. We also detect liveliness using AI with live-action commands. Both these steps together significantly minimise instances of fraudulent customers.

Get in touch with us to know more about our streamlined Digital and Video kyc process – we can customise a solution based on your requirement.

PFRDA Allows Onboarding Subscribers via Video KYC (V-CIP)

The Pension Fund Regulatory and Development Authority (PFRDA) permitted its intermediaries on October 6 to use Video based Customer Identification Process (V-CIP) for new onboarding and/or account withdrawals by National Pension System (NPS) subscribers. PFRDA’s announcement comes on the heels of IRDAI allowing life and general insurers to leverage video KYC facility, to vet customer credentials for new customer onboarding. Earlier this year, the RBI had amended the KYC norms, thereby allowing all banks and lending institutions to use V-CIP. Not to forget that most NPS distributors are regulated by the SEBI and RBI, who had already approved video based KYC. It is not surprising that PFRDA has followed suit.

The need and benefits are many, some obvious, and some not so much.

Why was the VCIP process required?

PFRDA which regulates NPS has been constantly introducing new methods of subscriber authentication and various modes of KYC to make the overall process seamless and subscriber friendly. It has already announced a slew of measures like offline Aadhaar based onboarding, third-party reliance for KYC, OTP/ eSign based onboarding and e-exit for eNPS Subscribers.

Still, NPS subscribers were facing many challenges. For instance, they had to be present for in-person verification at the POP (Points of Physical Presence) which resulted in a delay in the process of withdrawal as well as exit. Video-Based Customer Identification Process (VCIP) will do away with the requirement of compulsory physical presence.

VCIP allows for remote/ at-home opening of NPS account

With the COVID-19 pandemic forcing everyone into their homes, the turnaround time for onboarding processes has gone up significantly. Residential buildings have multiple rules around allowing visitors, for instance, which adds to further inconvenience and friction.

VCIP, apart from making the overall process paperless and instantaneous, also helps subscribers avail NPS services without being physically present at the POPs. The truly remote and secure nature of VCIP allows for better customer experience

Cost-effective vis-a-vis Physical KYC

Video KYC is as much about speed as it is about cost effectiveness. Processes can be designed for minimal steps (UI) and great User experience (UX). Opting for digital video identification solutions also brings down the cost compared to physical KYC. Additionally, a single agent delivers 15-20x productivity of an in-field agent. If the average cost of physical KYC of the customer would cost Rs 200, the video-based process cost will come down to 10-20 percent of the entire cost over the medium to long term.

VCIP reduces dependency on third party service providers and facilitates 2 mins onboarding process

The traditional KYC process can often take 10-15 days as there are were too many steps, entities, and checks and balances involved. On the other hand, a direct two-way audio video communication between the customer and authorized agent of the regulated entity can be established, thereby eliminating the dependency on any third party. One can complete KYC and onboarding through VCIP in a single video call, powered by intelligent queuing and experience management algorithms, as it will be a direct interaction between the customer and the representative. The humanisation of digital channels creates seamless, empathy and higher conversion rates. Well designed journeys can be executed in less than 2 minutes

Video KYC makes life easier for intermediaries as well

As per the the new guidelines, Points of Presence (PoPs) registered with PFRDA, must adhere to the V-CIP guidelines, issued by regulators for performing NPS related activities. By doing this the PFRDA intermediaries will not have any extra burden due to the introduction of the VCIP facility.

Technologists often speculate about the next wave of customer engagement. Video, with the decreasing cost of bandwidth and increasing adoption of internet based communication (such as Whatsapp Videos, Tik-Tok, Zoom, etc.), is the next big of driving customer interactions, and will increasingly be used by businesses to drive B2C interactions. The introduction of VCIP across products will also drive positive impact in financial inclusion initiatives; bringing people who were hitherto unable to avail financial services due to geographical and access challenges, time constraints or cost factor, into the mainstream.