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What is eKYC, and Why is It Important to Verify Your Customers?

Biometric Post
Jul 13, 2023
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Biometric Post
What is eKYC, and Why is It Important to Verify Your Customers?

Ever tried to open a bank account and found yourself lost in a sea of paperwork? eKYC might just be the lighthouse you need. Welcome to the age of digital verification where customer onboarding is as simple as a click, swipe, or face scan.

eKYC, short for 'electronic Know Your Customer,' is that smart lad making rounds in the financial sector, the telecom industry, and other sectors who require customer verification. It's a digital solution for verifying a customer's identity swiftly, securely, and let's not forget, eco-friendlier. In this article, we'll embark on a journey to understand the roots of traditional KYC, the evolution into eKYC, and the transformative role of biometrics in this context. We'll highlight the importance of eKYC in today's businesses, such as financial institutions, and show you why adopting these digital processes can take your customer relationships and risk assessment capabilities to new heights.

What is eKYC?

eKYC, or 'Electronic Know Your Customer', is a digital procedure used for identity verification that allows businesses, primarily financial institutions, to conduct customer due diligence. As the digital counterpart to traditional KYC processes, eKYC is designed to streamline customer onboarding, minimize fraud risk, and enhance regulatory compliance.

A woman scans her face with her phone to verify her identity using an eKYC app.
eKYC: A digital procedure used to know your customers

The eKYC Process

The eKYC process brings not just simplicity and efficiency, but also a sustainable approach to customer identification. By replacing physical documents and face-to-face meetings with digital alternatives, it reduces carbon footprints while also speeding up the identification process. Here's how it works:

The eKYC Process
The eKYC Process

  1. Online Registration: Customers start the process by registering on the service provider's portal, providing basic details such as their full name, date of birth, contact information, and address. This digital process replaces the need for physical forms and in-person appointments, ensuring customers can kickstart their journey from the comfort of their own homes, any time they choose.
  2. Digital Document Submission: The next step requires customers to upload digital copies of their identification documents. This could be a passport, driving license, or in the case of Indian customers, an Aadhaar card. Notably, the digital submission of these documents marks a departure from traditional KYC processes, eliminating the need for physical documents which can be lost, damaged, or take days to reach their destination by post.
  3. Document Verification: Starting with data validation as the first step involves checking the authenticity of the documents provided by the customer against trusted databases. This early validation can quickly weed out fraudulent or inaccurate information before proceeding to more resource-intensive verification methods.
  4. Remote Identity Verification: After initial data validation, the eKYC process can then move to verify the customer's identity using the now-validated data. This step might involve more advanced techniques such as biometric verification (facial recognition, fingerprint scans) or video identification. Since the data has already been validated, these techniques can focus on matching the biometric data with the validated identity information, adding a layer of security by ensuring that the person providing the information is the same person to whom it belongs.
  5. Risk Assessment: Upon successful identity verification, the process advances to risk assessment. This step evaluates the potential risk a customer may pose in terms of financial fraud, money laundering, or other illicit activities. Utilizing advanced analytics and algorithms, the eKYC system assesses transaction patterns, financial behavior, and other risk indicators to assign a risk level to the customer. This crucial phase ensures that financial institutions can take proactive measures to mitigate potential risks associated with new and existing customers.
  6. Completion and Automated Maintenance: Once the information is verified and the customer is onboarded, the eKYC process doesn't just end. It transitions into a phase of automated, ongoing monitoring to ensure that the customer's data remains up-to-date. This is crucial for maintaining KYC compliance, particularly for financial institutions.

In a nutshell, eKYC signifies the adoption of digital processes to ensure customer verification, thus enhancing the overall efficiency, security, and customer experience in business transactions.

What are the Differences Between eKYC and Traditional KYC?

To understand the impact of eKYC, we must first examine its foundation: the traditional KYC process. Tracing its roots and significance in today’s digital landscape provides a necessary context for appreciating the shift towards eKYC. This exploration not only reflects on the origins and development of KYC practices but also sets the stage for comparing these traditional methods with the advanced approaches of eKYC.

The Traditional KYC Process vs. eKYC Process

Know Your Customer' (KYC) principles have long been the cornerstone of financial operations, aimed at preventing identity theft, financial fraud, and money laundering. Traditionally, this process has been manual and paper-intensive, involving physical documentation and in-person verification to establish the identity of clients. Let's examine how these foundational practices compare with the streamlined, technology-driven approach of eKYC.

1) Manual Data Collection vs. Digital Data Submission:

Traditional KYC relies on customers manually filling out paper forms with details like name, date of birth, address, and occupation, and submitting physical copies of identification documents (e.g., passport, driver's license). eKYC, in contrast, digitalizes this step, enabling online data submission and document upload for a faster and more user-friendly process.

2) Physical Verification vs. Automated Identity Confirmation:

In the traditional framework, institutions manually cross-verify provided information against physical legal documents to authenticate a customer's identity, a process prone to delays. eKYC introduces automated technologies like OCR and biometric verification to expedite identity confirmation, reducing time and error.

3) Manual Risk Assessment vs. Algorithmic Analysis:

Traditional KYC methods assess the risk of unlawful activities like money laundering through manual review of a customer's financial history and other factors. eKYC revolutionizes this by employing algorithms and data analytics for quicker, more precise risk assessment, often in real-time.

4) Periodic Manual Monitoring vs. Continuous Automated Surveillance:

The traditional approach involves ongoing, manual monitoring of customer transactions to spot suspicious activities, requiring significant manpower and resources. eKYC leverages continuous, automated monitoring systems that use analytics to detect anomalies efficiently, enhancing security and compliance without constant manual intervention.

While the traditional KYC framework has been instrumental in safeguarding financial transactions, it is not without its drawbacks. The necessity for physical documents and manual verification makes the process not only time-consuming but also resource-intensive. These challenges underscore the need for a more efficient method, leading to the development and adoption of eKYC solutions that promise quicker turnaround times and reduced environmental impact.

KYC to eKYC: An Evolution Toward Security and Efficiency

eKYC is not a departure from the principles of the traditional KYC process; rather, it is an enhancement. eKYC processes respect the foundational objectives of KYC, which include customer identification, fraud prevention, and adherence to legal procedures.

eKYC leverages technology to streamline and accelerate the process of customer due diligence, making it:

  • More efficient by speeding up the process of customer onboarding.
  • More accurate by reducing the chances of human error.
  • More convenient for customers, who no longer have to supply physical documents or attend in-person meetings.
  • More secure, especially when integrated with biometric verification.

Understanding the contrast and evolution from traditional KYC to eKYC can help us appreciate the innovative steps taken to optimize customer verification while retaining its effectiveness and trustworthiness. Up next, we'll delve into how biometrics is playing a role in taking eKYC to new heights.

Biometrics in eKYC

In the world of digital identity and customer verification, biometrics is emerging as the new frontier. This advanced technology adds an extra layer of security to the eKYC process and is rapidly becoming a game-changer in the industry. But what exactly is biometrics, and how are they influencing eKYC? Let's take a look at the details.

What is Biometrics?

In its simplest form, biometrics is the measurement and analysis of unique physical or behavioral characteristics. These may include fingerprints, facial features, iris patterns, or even the unique rhythm of an individual's typing. In the context of eKYC, biometrics usually refers to facial recognition, fingerprint recognition, and sometimes even iris recognition.

Biometrics in the eKYC

When incorporated into the eKYC process, biometrics adds an additional layer of security and convenience. Here's how it's being utilized:

  1. Biometrics Submission: After customers have completed online registration and document submission, they're asked to provide a biometric identifier. This could be a selfie for facial recognition or a fingerprint scan.
  2. Automated Verification: The eKYC platform compares the biometric data provided by the customer with the biometric information contained in their identity documents or against a database, such as the Aadhaar authentication database in India.

Biometrics in the eKYC-Facial recognition for online eKYC identity verification
Biometrics in the eKYC-Facial recognition for online eKYC identity verification

Why Use Biometrics in the eKYC?

Biometrics can significantly elevate the verification process in eKYC, and here's why:

  1. Enhanced Identity Verification: Biometrics, such as fingerprint scanning or facial recognition, provide a highly secure way of confirming a person's identity. The unique nature of biometric data makes it exceedingly difficult for potential fraudsters to fake, reducing the risk of identity theft or fraud.
  2. Increased Speed and Efficiency: eKYC can be simplified through biometric verification, allowing for faster and hassle-free customer onboarding. Through online matching of biometric data against stored or provided information, new customers can now be verified and onboarded within minutes instead of days. This not only reduces the time and hassle of onboarding, but it also minimizes the need for time-consuming follow-up verification processes.
  3. User Convenience: While the eKYC process primarily serves regulatory and security purposes, it's essential not to forget the end-user. Biometric verification provides a smoother experience for customers. Instead of uploading multiple documents and waiting for manual verifications, a quick biometric scan can expedite and simplify their onboarding journey.

In the context of eKYC, biometric technology is not a replacement for traditional identity verification methods, but rather a powerful supplement that offers increased accuracy and security. By combining biometric verification with other identity checks, organizations can create a highly robust eKYC process that significantly reduces the likelihood of fraudulent activities.

Biometrics on-the-go: Biometric Mobile Terminals Propel eKYC Forward

Biometric mobile terminals are playing a pivotal role in the biometric revolution of eKYC, offering unparalleled portability and convenience. These devices empower customers to effortlessly provide their unique biometric data, whether through quick fingerprint scans or taking selfies, anytime and anywhere.

When out in the field, customers can swiftly submit their biometric data utilizing mobile ID devices. These data are then cross-verified with ID databases like Aadhaar to authenticate important documents such as national ID cards. This expedites the eKYC process and promotes inclusivity, particularly for individuals with limited digital presence.

The introduction and adoption of biometric mobile ID demonstrate how technology is continually pushing the boundaries of what's possible in eKYC, making the process more accessible and user-friendly, and driving inclusion by reaching out to broader segments of the population.


The Benefits of eKYC

The transformative power of eKYC isn't just confined to streamlining the verification process. It also brings along a plethora of benefits for both the service providers and the customers. In this section, let's dive into these advantages, and learn why eKYC is a pivotal player in the digital era.

For Financial Institutions and Other Service Providers

1) Enhanced Efficiency:

The eKYC process significantly trims down the time needed for customer onboarding. The need for physical presence or paper documents is eliminated, making it a swift and seamless experience.

2) Cost Reduction:

By replacing traditional KYC's paper-intensive methods with digital verification, organizations can drastically cut down on operational costs associated with document handling and storage.

3) Improved Accuracy:

eKYC reduces the chances of human errors that might occur while entering data or verifying documents. By leveraging automation, it ensures more accurate data collection and validation.

4) Scalable Growth:

With a digital process, businesses can handle a higher volume of KYC checks in less time. This scalability allows for rapid growth, particularly for online businesses.

5) Enhanced Compliance:

eKYC simplifies the compliance with KYC regulations. Digital records are easier to maintain, retrieve, and audit, helping organizations stay on the right side of KYC and Anti-Money Laundering (AML) laws.

For Customers

6) Convenience:

The process can be completed from the comfort of home, without the need to visit a physical location or submit paper documents. This is particularly advantageous in a post-pandemic world, where remote processes are becoming the norm.

7) Swift Onboarding:

Thanks to the automated nature of eKYC, new customers can be verified and onboarded rapidly, sometimes in real-time. This quick turn-around can greatly enhance customer satisfaction.

8) Data Security:

By using advanced encryption technologies, eKYC ensures that customer data is securely stored and transmitted.

9) Paperless Process:

In an increasingly eco-conscious world, the move to a paperless process is not just convenient, but also environmentally friendly.

eKYC, therefore, is a win-win scenario. It is a powerful tool that not only ensures compliance with legal procedures but also enhances the customer experience. Its benefits extend far beyond just "knowing your customer" – it is redefining the very way businesses and customers interact in the digital age.

How eKYC is Revolutionizing Industries

The digital transformation ushered in by eKYC is not confined to the financial sector. It is a wave of change that's disrupting a variety of industries, proving its versatility and applicability in an array of contexts. Let's take a brief tour of how eKYC is redefining norms and elevating standards across different industries.

1) The Financial Sector: Spearheading the eKYC Revolution

As the front-runner in the adoption of eKYC processes, the financial sector has seen sweeping transformations. The shift to eKYC has not only accelerated customer onboarding but has also brought significant cost efficiencies while ensuring robust compliance with KYC and anti-money laundering regulations.

  • Digital Banking: eKYC has made it possible to open bank accounts in minutes rather than days or weeks. This shift has streamlined the entire customer journey, making the onboarding process quick and hassle-free.
  • Seamless Insurance Services: Insurance companies have embraced eKYC to expedite policy issuance and claim settlement processes. Customers can complete online KYC verification, leading to rapid policy activation and efficient service delivery.
  • User-friendly Fintech Platforms: With eKYC, fintech companies are making financial services more accessible and user-friendly. They've reduced the onboarding time significantly, welcoming a wider demographic of tech-savvy customers.

2) Healthcare Industry: The Advent of Secure Patient Onboarding

In healthcare, accurate patient identification is vital, and eKYC has emerged as a key player in enhancing this process. By offering a quick and reliable way to register patients, eKYC is setting new standards in healthcare efficiency.

  • Efficient Hospital Registration: The integration of eKYC into the patient registration process leads to faster data collection and reduces the chance of errors, enhancing both administrative efficiency and patient experience.
  • Empowering Telemedicine: As telemedicine takes center stage in the new age of healthcare, eKYC allows for remote identity verification. This capability is instrumental in delivering personalized and secure healthcare services online.

3) E-commerce: Nurturing Trust in the Digital Marketplace

E-commerce platforms are leveraging eKYC to fortify their customer verification processes. As online transactions continue to surge, eKYC plays a crucial role in maintaining user trust and ensuring secure transactions.

  • Customer Verification: By implementing eKYC, e-commerce platforms can authenticate their customers' identities, thereby reducing the incidence of fraud and enhancing customer trust.
  • Transaction Security: Employing eKYC during transactions can add an extra layer of security to online payments, further enhancing consumer confidence.

4) Telecommunications: Reinventing Customer Onboarding

The telecommunications sector, characterized by high subscriber volumes and a constant need for customer identification, is also harnessing the power of eKYC for a smoother and more reliable onboarding experience.

  • SIM Card Registration: The process of activating a new SIM card, which previously required physical document verification and could take several days, is now instantaneous thanks to eKYC. Customers can validate their identity online, and the SIM card can be activated almost immediately. This makes the customer experience better, reduces the risk of identity theft, and adds a crucial layer of security in the fight against criminal activities.
  • Service Upgrades: Whether it's upgrading a data plan or adding a new service, eKYC makes the process more efficient. Customers can quickly verify their identity and approve changes to their service, making for a seamless experience.

The transformative power of eKYC is evident across various industries. By redefining customer verification and onboarding, it's driving growth, increasing customer satisfaction, and paving the way for a digital future.

The Future Trends of eKYC

As we gaze into the future, it's clear that eKYC is not a fleeting trend. It is a substantial shift in how businesses will identify and verify their customers, powered by advancements in technology and changes in consumer behavior. So, what does the future hold for eKYC?

1) Integration with Advanced Technologies

Emerging technologies like artificial intelligence (AI) and blockchain are set to synergies with eKYC, further enhancing its capabilities and applications.

  • AI-Powered eKYC: AI can aid in rapid and accurate verification of identity documents, reducing the time spent on manual checks. Advanced AI algorithms can even perform facial recognition checks, comparing photographs on identity documents with real-time photos or video streams to ensure the person completing the verification is the actual document holder.
  • Blockchain for Security: The use of blockchain technology could decentralize data storage in eKYC processes, making them even more secure.
  • Risk Assessment Using ML: Machine Learning can automate risk assessments based on historical data and transaction patterns, resulting in more accurate risk profiles.

2) The Rise of Biometric eKYC

Harnessing biometric data for eKYC processes is becoming more prevalent. Whether it's facial recognition, fingerprints, or iris scanning, biometric technology is setting new benchmarks in customer verification, providing an unparalleled mix of speed, accuracy, and security.

3) Expansion Beyond Financial Services: An All-Industry Affair

The adoption of eKYC will likely extend beyond financial institutions and become a standard in various industries, from healthcare and education to travel and hospitality. With the convenience and security offered by eKYC, it's only a matter of time before more sectors embrace this digital transformation.

4) Stronger Regulatory Compliance

As the adoption of eKYC grows, regulatory bodies around the world are expected to provide greater support and clearer guidelines. The challenge will be to balance the need for security and privacy with the advantages of fast and efficient customer verification.

  • Global Standards for eKYC: With eKYC being adopted worldwide, there's a growing need for global standards and best practices that ensure effective and secure eKYC processes.
  • Balancing Privacy and Verification: As eKYC becomes more widespread, safeguarding customer privacy while maintaining the efficiency and security of the verification process will be a significant focus.

With these trends, the future of eKYC looks promising. Not only will it continue to simplify customer onboarding and reduce fraud risk, but it will also enable businesses to comply with regulatory standards more efficiently. Its advancement will undoubtedly push the boundaries of digital transformation, redefine customer experiences, and reinforce the crucial role of digital identity in our world today.


As we've seen, eKYC represents more than just an advancement in technology. It's an entirely new approach to the way businesses interact with customers. By offering a streamlined, efficient, and secure method for customer verification, eKYC is transforming industries and paving the way for a digital future where paperless processes and swift onboarding become the norm rather than the exception.

The financial sector has been a trailblazer in this regard, but we've only scratched the surface. Other sectors are also adopting eKYC, realizing its potential in enhancing customer experience, reducing fraud risk, and ensuring regulatory compliance.

Moreover, the fusion of eKYC with biometrics and other advanced technologies has unlocked new possibilities. It has not only enhanced the security of the verification process but also made it remarkably user-friendly. As our company Aratek continues to innovate in biometric solutions, we are excited to be a part of this evolving landscape.

In a world increasingly becoming digital, eKYC is proving to be an invaluable tool. As we move forward, it is set to redefine the interaction between customers and businesses, making transactions smoother, safer, and more convenient. While the journey has just begun, the future of eKYC is promising, bringing us closer to a seamless, secure, and digital world.

And with that, we draw the curtain on this in-depth look at eKYC. Whether you are a customer wondering about the next steps of online verification or a business considering adopting eKYC processes, we hope this article has shed some light on the importance of eKYC and how it stands to revolutionize the future. Stay tuned for more exciting insights into the world of digital identification and customer verification!


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