Whether you're opening a new bank account, applying for a loan, or investing in financial products, eKYC is an important tool for quickly and securely verifying identities. But what is eKYC? How does it work, and what documents do you need? Let’s understand here.
eKYC stands for Electronic Know Your Customer. It’s a process that verifies a customer’s identity and address digitally before they interact with a financial institution, telecom service, or other regulated industries.
In simple terms, eKYC is a paperless process that allows organizations to confirm customer identities online, so there’s no need for physical documents or in-person visits.
In traditional KYC (Know Your Customer), you need to provide physical copies of identification documents like an Aadhaar card, PAN card, or passport to verify your identity. In contrast, eKYC uses digital methods to verify your identity without needing hard copies or your physical presence.
Speed: eKYC processes can be completed in a matter of minutes, whereas old KYC takes days or even weeks.
Convenience: No need to visit a physical branch or office; everything can be done online.
Cost-Effective: Saves the costs associated with paperwork and manual verifications.
eKYC is more than just a technical innovation; it’s a regulatory requirement that offers many benefits for both organizations and customers. It makes sure that all customers are verified and that their identities are legitimate, helping to prevent fraud and comply with legal regulations.
Prevents Identity Theft and Fraud: eKYC verifies customers digitally and securely, helping to stop fraud and identity theft.
Enhances Customer Convenience: With eKYC, you can complete the verification process quickly from home.
Supports Government Regulations: It ensures compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) rules.
Even though eKYC is a digital process, customers still need to submit some essential documents electronically. These documents are used to verify both their identity and address.
Documents accepted as proof of identity in the eKYC process:
Aadhaar Card
PAN Card
Passport
Voter ID
Driving License
Any government-issued ID with a photograph
Documents accepted as proof of address:
Aadhaar Card
Utility Bills (electricity, water, gas, etc.)
Rent Agreement
Voter ID
Bank Statement
Mobile Number: For OTP (One Time Password) verification.
Email ID: Some financial institutions may ask for email verification as well.
In most cases, the Aadhaar card is the most commonly used document for both identity and address verification due to its wide acceptance and integration into the eKYC process.
The eKYC process is designed to be quick and user-friendly. Below is a step-by-step breakdown of how it works:
The first step is to initiate the eKYC process by visiting the website or app of the service provider (bank, financial institution, telecom company, etc.) that requires your verification.
Once you're on the service provider’s platform, you will be asked to choose how you want to complete the KYC process. Select eKYC as your preferred option.
You will be prompted to enter your Aadhaar number (or another relevant ID, depending on the service provider) to begin the process. Ensure the details you provide match your official documentation.
To verify that the Aadhaar card belongs to you, a One Time Password (OTP) will be sent to your registered mobile number. Simply enter the OTP in the required field to authenticate your identity.
Once the OTP is validated, the service provider will access your Aadhaar details from the UIDAI (Unique Identification Authority of India) database. This includes your demographic information, photo, and address. No physical copies of documents are needed since everything is done digitally.
After your details are verified, your eKYC process is complete, and you can proceed with the service you applied for, be it a loan, investment, or any other financial product.
There are two main types of eKYC processes, depending on the level of verification and interaction required:
This is the simplest and fastest form of eKYC. Here, you authenticate yourself using the OTP sent to your Aadhaar-registered mobile number. This type of eKYC allows for minimal documentation and is completed in minutes.
Advantages:
Quick process
No need for physical verification
Ideal for small financial transactions
Disadvantage:
Limited Transactions: Some service providers may limit the transactions you can perform using OTP-based eKYC, especially for high-value transactions.
Biometric eKYC uses your fingerprint or iris scan to verify your identity. This method offers a higher level of security and is often used for high-value transactions or when stricter regulations apply.
Advantages:
Higher Security: Using biometric data makes the process more secure and reliable.
No Transaction Limit: Unlike OTP-based eKYC, biometric verification can be used for large transactions.
Disadvantages:
Requires Physical Device: You may need access to a biometric scanner, which can be inconvenient for some people.
Takes More Time: Biometric verification usually requires you to be physically present at a center with the necessary equipment.
Now that we’ve walked through the process, let’s take a closer look at the key benefits of eKYC for both individuals and organizations:
Old KYC processes can take days or even weeks due to manual paperwork and verification. With eKYC, the process is completed in a matter of minutes. This is especially beneficial when time is of the essence, such as in the case of a loan or account opening.
eKYC allows you to complete the entire verification process from the comfort of your home. No need to visit a bank or financial institution in person, saving you time and hassle.
For organizations, eKYC removes the need for physical storage of documents and lowers the operational costs of manual customer verification. This makes the process more cost-effective for both the institution and the customer.
eKYC reduces the risk of document fraud or identity theft as the entire process is carried out digitally with stringent security measures in place. Biometric eKYC, in particular, offers a higher level of security as it’s difficult to forge fingerprints or iris scans.
The reduction in paperwork and physical documentation makes eKYC an environmentally friendly option, helping to lower the carbon footprint of financial and service industries.
Since the eKYC process is digital, it allows people from remote locations to easily verify their identity without needing to travel to a branch or service center. This is particularly important in rural areas where access to physical offices may be limited.
eKYC marks a major change in how institutions verify identities, improving efficiency, security, and compliance in the digital age. By using technology to simplify the documentation and verification process, eKYC makes onboarding easier for customers and helps reduce risks related to fraud and identity theft. As regulations evolve and technology advances, eKYC is expected to become even more common, becoming essential for modern financial and business operations. Adopting eKYC not only meets current needs but also helps organizations succeed in a digital world, ensuring they stay competitive while prioritizing customer trust and safety.
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eKYC stands for "Electronic Know Your Customer." It refers to the digital process of verifying a customer's identity to comply with regulatory requirements.
eKYC uses technology such as biometric verification, document scanning, and machine learning to authenticate a person's identity online. Customers typically submit documents digitally, which are then verified by automated systems or personnel.
Common documents required for eKYC include government-issued ID (like a passport or driver's license), proof of address (utility bill or bank statement), and sometimes a selfie for biometric verification.
Yes, eKYC is designed to be secure, employing encryption and advanced security protocols to protect personal data. However, the level of security can vary by provider, so it's essential to choose a reputable service.
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