TL;DR:
To comply with RBI and regulatory norms, financial institutions using Video KYC (VKYC) must follow a structured set of pre, during, and post-onboarding compliance steps. These include customer authentication, document checks, video protocols, data storage, and audit trail maintenance all while ensuring privacy, uptime, and DPDP compliance. We cover these steps and more details below.
Over the past decade, our relationship with technology and digital services, especially in finance, has changed drastically. Since 2016, bank deposits have nearly doubled, and the number of active bank accounts in India has grown to 2 billion. Technology-first financial institutions have contributed immensely to this growth, and still ensure that customers experience safe and secure onboarding and day-to-day spending experiences with them.
However, safety and security is a two-way street. With the added convenience, banks and NBFCs face significant threats from fraudsters. The RBI reported that bank fraud increased to a whopping Rs 36,014 crore in FY25, which was a 194% increase in amount over FY24. Financial institutions must balance regulatory compliance with customer experience, creating seamless onboarding processes that don’t compromise security standards.
The good news is that this ongoing battle is being continually improved upon by fintechs. One of the key tech solutions that has immensely helped in reducing digital identity fraud is Video KYC.
At Digitap, we’ve observed how forward-thinking financial institutions are leveraging Video KYC, which was first introduced by the RBI in 2017 and refined through subsequent circulars, to bridge this gap.
Video KYC vs KYC: Which is Better?
Video KYC differs fundamentally from traditional KYC in its approach to customer verification. While conventional KYC relies on physical document submission and in-person verification, Video KYC leverages:
- Real-time video interaction
- Live document verification
- Biometric authentication
This digital-first approach not only reduces processing time from days to minutes but also significantly enhances security through multi-layered verification protocols.
| Feature | Traditional KYC | Video KYC |
|---|---|---|
| Interaction | In-person | Real-time video |
| Verification | Manual document checks | OCR, biometrics, AI tamper check |
| Compliance | Time-consuming, often physical | Fast, auditable, RBI-guided |
The compliance objectives for financial institutions are clear: prevent money laundering, combat terrorist financing, and ensure accurate customer identification while maintaining operational efficiency.
The result? Banks and NBFCs have to work on overdrive to ensure that customer experience remains positive, and that safety is maintained. In an era where customers can open digital wallet accounts in minutes, any delay or misstep can cost institutions a lot.
Pre-Video KYC Compliance Requirements
Onboarding processes usually involve a few crucial steps to root out fraudsters before they even make it to the Video KYC stage. For example, Video KYC operators must undergo specialized training covering regulatory compliance, fraud detection, document verification techniques, and customer interaction protocols.
On the other side of the screen, customer eligibility criteria should form the first checkpoint. This determines who can access Video KYC services based on risk assessment, account type, and regulatory guidelines.
During Video KYC – Step-by-Step Compliance Process
Customer Authentication
The Video KYC process begins with comprehensive customer authentication, establishing the foundation for secure onboarding. Identity document verification involves real-time examination of government-issued IDs, checking for security features, tampering signs, and authenticity markers.
Some of the processes involved include:
- Advanced optical character recognition (OCR) technology, which extracts and validates information while trained operators conduct visual inspections.
- Live biometric authentication, which compares the customer’s live image with their identity document photograph. Some institutions also incorporate voice biometrics, creating unique voiceprints for additional security.
- Address proof validation, which ensures customers provide legitimate residential information.
- Real-time document tampering checks, which utilize AI-powered tools to detect alterations, forgeries, or synthetic documents.
Video Call Protocol
Video call protocols ensure consistent, compliant interactions across all customer onboarding sessions. Minimum call duration requirements are typically 5-10 minutes, allowing sufficient time for thorough verification while maintaining operational efficiency.
Customer consent procedures require explicit agreement for video recording, data processing, and information storage. Operators must clearly explain the process, obtain verbal consent on camera, and ensure customers understand their rights. Consent documentation becomes part of the permanent record.
Verification Steps
Face matching with identity documents represents the core of Video KYC verification. Advanced algorithms compare live customer images with document photographs, accounting for aging, lighting variations, and camera quality differences. Multiple comparison points ensure accuracy while preventing false rejections.
Document authenticity checks go beyond basic visual inspection. Trained operators examine security features, watermarks, holograms, and printing quality. UV light verification, when available, reveals hidden security elements. Digital forensics tools analyze document metadata and compression artifacts.
Address verification procedures validate residential information through multiple channels. Operators may request additional documents, conduct geographic verification, or initiate postal verification for high-risk cases. Cross-referencing with utility databases or government records provides additional validation.
Risk assessment and scoring algorithms evaluate multiple factors throughout the verification process. Customer behavior, document quality, verification success rates, and external data sources contribute to risk scores. High-risk cases may require additional verification steps or manual review.
Post-Video KYC Compliance Activities
Once Video KYC verification concludes, comprehensive post-processing activities ensure regulatory compliance and operational excellence. Post Video KYC, you must:
- Follow data storage and retention requirements, which mandate secure, encrypted storage of all customer information, documents, and video recordings.
- Ensure audit trail maintenance creates comprehensive records of all verification activities, including operator actions, system decisions, and approval workflows. These trails enable regulatory reporting, internal audits, and fraud investigations.
- Perform quality assurance and monitoring processes evaluate Video KYC effectiveness through regular sampling, performance metrics analysis, and outcome tracking.
Video KYC and Tech Compliance
Technology and security compliance forms the backbone of effective Video KYC implementation. System uptime and reliability requirements ensure Video KYC services remain available when customers need them.
Integration with existing banking systems enables seamless customer onboarding workflows. Your tech partner will connect their Video KYC solution with core banking systems, customer relationship management tools, and fraud prevention systems to ensure quick and easy upkeep.
To maintain compliance with DPDP, you must have comprehensive privacy frameworks, consent management systems, and data governance protocols in place. Even within the VKYC process itself, data privacy must be ensured. Recording and storage protocols mandate comprehensive documentation of all Video KYC interactions. Complete call recordings, including audio and video streams, must be stored securely with proper encryption and access controls.
Conclusion
Video KYC compliance requires a comprehensive approach encompassing regulatory understanding, robust technology implementation, and continuous process improvement. The key compliance requirements span pre-verification preparation, real-time verification protocols, and post-processing activities, all underpinned by strong technology and security frameworks.
Properly implemented Video KYC delivers significant benefits: reduced onboarding time, enhanced fraud prevention, improved customer experience, and regulatory compliance. These advantages position forward-thinking financial institutions for competitive success in India’s rapidly evolving fintech landscape.
For banks and NBFCs ready to transform their customer onboarding processes, the time for Video KYC adoption is now. Partner with experienced providers like Digitap to implement compliant, efficient, and customer-friendly Video KYC solutions that drive business growth while maintaining the highest standards of regulatory compliance.