Following the Supreme Court’s ban on Aadhar based verification and (Know Your Customer) KYC process for privately owned organisations, the telecom companies were keenly looking for other means of authentication. And, the Reserve Bank of India is mulling for introducing video based KYC for customer verification, as suggested by the industry.
After the removal of the biometric verification system for private companies, a video-based KYC was considered to be a viable process and had been suggested by some technology startups. However, rather than already recorded videos for verification, the companies prefer live video based customer verification to maintain reliability and avoid frauds. And, the Indian banks are eventually shifting to dynamic verification techniques like digital verification rather than the offline QR code scans that were used till now.
Foreseeing this, RBI announced that “they want live videos to be used and was not keen on allowing recorded videos authenticated using artificial intelligence”. During one of the meetings last week, RBI stated that they’re working on an XML internet format to retrieve the information, and discussions with the government, IT developers and Aadhaar issuing bodies are going on. The main reason behind these new potential verification methods is to prevent money laundering and the RBI is still waiting for the amendments to the Prevention of Money Laundering Act before modifying its know-your-customer (KYC) master circular since the guidelines derive their executive authority from the law.
The decision to change KYC system could be a bit cumbersome as well and a minimum of three-step process, since it is necessary for the generation of XML based system. Taking into consideration the complexity of the steps involved, it could be a bit difficult task for the financially and socially marginalized people to accept and follow this change; and make it accessible for all. But if the idea becomes a success, there will be humongous amounts of benefits to the system, major most of them being utmost transparency.