Improving Accessibility In Contactless Banking Using Video KYC
By Krupesh Bhat, Founder, SignDesk
What is Contactless Banking?
Contactless banking is exactly what it sounds like: a means to avail banking services such as opening accounts, obtaining loans, and making payments without having to manually fill out forms or interacting with a banking official.
The web platforms of most banks are integrated with paper-free automation platforms to streamline the digital onboarding process. eSign & eStamp solutions are leveraged to expedite banking documentation & eNACH eMandate solutions automate loan EMI payments.
Customers, therefore, no longer need to visit a physical bank to create a bank account or take out a loan thanks to digital onboarding. The traditional process, which takes days or weeks to finish, may now be completed in a matter of minutes.
Digital Banking has been on the rise since the advent of the pandemic. 68 percent of Indian customers currently use online or mobile banking for financial transactions and 48 percent of respondents intend to utilize contactless payments instead of cash or cards, according to surveys.
Consumer behavior is changing in terms of where and how customers make payments, conduct transactions, and bank. In an increasingly digital-first world, contactless banking has been bridging the gap between the Indian population & the formal economy.
Advantages of Contactless Banking
As opposed to traditional banking methods, contactless banking provides numerous benefits to both consumers and financial institutions (FIs).
Convenient Digital Consumer Banking:
- Digital Onboarding —
Digital onboarding comprises the typical onboarding procedure of verifying customer KYC, however it is done through the internet in a quick, easy, and secure manner. Filling out forms, making over-the-counter document submissions, and verifying documents manually are all laborious procedures that may be eliminated with good digital onboarding.
- Account Opening, maintenance & loan disbursement —
Contactless banking procedures enable expedited account opening for customers through digital KYC document submission & verification, and online account maintenance through chat-enabled KYC platforms. Customers can not only open accounts from the comfort of their homes but also avail quick loans, with loan document submission & verification also completed digitally. End-to-end contactless banking has been crucial in giving vulnerable populations easy access to credit, especially during the COVID-19 pandemic.
- Diversity in payments —
In addition to speeding up transactions, contactless payments offer further convenience to consumers due to the variety of payment devices available. Cards aren’t the only way to make contactless payments. In reality, contactless readers using NFC technology allow customers to pay with their smartphones, watches, and contactless cards, allowing them to pay in the method that is most convenient for them.
Efficient Internal Banking Procedures:
- Improved operational efficiency –
Because contactless banking shortens transaction & onboarding times, banks can onboard more customers using digital KYC verification, get loans out faster using end-to-end digital loan disbursement, and offer key services such as account maintenance, account changes & EMI payments collection completely online. Contactless banking increases the efficiency of these processes at a significantly lower cost.
- Cost-efficient –
Financial institutions stand to massively increase cost efficiency by embracing contactless banking methods. Leveraging Aadhaar KYC to onboard customers massively reduces onboarding costs & turnaround times. Integrating with template-based drafting, eSign & eStamping services, and eNACH eMandate can further boost expense reduction for banks by enabling cost-effective digital banking.
- Fraud Protection –
Contactless payments technology is encrypted to prevent any hacking efforts, in addition to being more safe for customers. Furthermore, improved transaction security means that firms may readily get their funds without having to deal with challenging issues. Additionally, contactless banking helps banks protect against fraud & cyber-risks.
Challenges in Contactless Banking
Contactless banking is immensely advantageous but also risky due to mobile security and data privacy dangers, just like any other technology. Security is among a handful of challenges in contactless banking –
- Adoption & Acceptability —
In recent years, the number of merchants who accept contactless payments has risen. However, many stores, particularly independent ones, still do not have the digital infrastructure in place to accept contactless payments due to a lack of digital literacy & access. In the coming years, the number of merchants accepting contactless payments should continue to rise due to a combination of increasing digital adoption & digital-first government initiatives.
- Lack of Multilingual Applications –
Companies and government organizations in India continue to face a significant language barrier when communicating with citizens via digital channels. During the lockdown, sectors such as banking, healthcare, and education witnessed an increased need for interaction with Indian-language users.
When banks, insurance firms, and fintech businesses connect with this previously untapped language-first consumer base via the internet, they need to employ local languages.
- Customer Security Concerns –
Despite the fact that contactless banking is supported by a comprehensive fraud detection system and multi-layered security, many customers are still hesitant to use it due to fears of data privacy & control, a lack of digital literacy & obscure data processing procedures. This cautious attitude may hinder firms from implementing a contactless payment system.
- Technological limits —
Despite surging smart-phone adoption rates in India – two-thirds of the population will have access to mobile internet by 2023 – less than 5% of people will have fast internet connections. This means that broadband limitations will continue to be a crucial challenge for contactless banking.
Additionally, contactless or mobile banking processes are not completely trusted and viewed as an add-on service to traditional banking rather than a standalone service.
How Video KYC Solves for These Challenges
Video KYC is an online technique of face-to-face identity verification in which businesses conduct client verification through video chat with the assistance of a KYC agent.
With millions of accounts established using Video KYC the banking sector has been the most enthusiastic adoption of Video KYC. With a growing number of insurers and securities firms getting on board, Video KYC is quickly becoming a standard in KYC verification. This is, in so small part, because Video KYC offers solutions to the challenges in contactless banking.
eNach eMandate Integration
The electronic National Automated Clearing House (eNACH) enables high-volume, low-value electronic transactions & eliminates the majority of the steps that customers & banks go through in the payments process.
Video KYC solutions are integrated with eNACH to enhance contactless banking by allowing for hassle-free loan repayments. Customers simply need to authenticate their mandates using their Aadhaar, banking cards or NetBanking details to automate periodic loan EMIs. Payments are further secured by the usage of Additional Factor Authentication (AFA).
ML-enabled Fraud Filters
Digital client onboarding solutions employ cutting-edge machine learning algorithms to build robust fraud detection filters that detect and filter out phony profiles, fraudulent documents, and bad actors in real time.
Several companies have additionally put in place industry-grade client data security policies to protect consumer information submitted during KYC. These are critical in preventing several types of online fraud including spoofing attacks, false identities, or even deep fakes.
Vernacular Language Support for KYC
Modern KYC verification solutions cover a variety of vernacular languages and are presently being utilized to onboard regional consumers by a number of local banks. Onboarding solutions now feature intelligent dashboards built with the linguistic diversity of India’s population in mind, resulting in a comfortable and welcoming onboarding experience for all customers.
Video KYC & Digital-first Banking: The Road Ahead
Financial institutions looking to fast-track their digital transformation and enlarge their digital footprint need to stay cognizant of how contactless, digital-first banking impacts customers. While features such as AI-powered KYC verification & automated risk assessment are certainly great value additions, several basic challenges must be addressed concomitantly.
A diverse and growing economy such as India requires banking solutions capable of an equal amount of flexibility and robustness. Contactless solutions need to work well under high-stress conditions such as low bandwidth & high server strain. Solutions must also be well thought out and incorporate a diverse number of use cases and features to enable instant processes in a way that’s easy to follow.
Contactless banking is what’s next and India’s financial space must build the solutions required to make the transition smooth & seamless.
SignDesk is a global provider of document & compliance automation services, with an aim to help businesses achieve their digital transformation goals. SignDesk offers end-to-end automation solutions for AI-powered digital onboarding, smart contract lifecycle management, and eSign-enabled audit trail creation to enable industry segments & business verticals to go paper-free.
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