Do you know about KYC and its importance in the finance field? KYC is knowing your customers, which allows banks and financial institutions to know about their customers so that they can offer and extend business services to their clients. KYC has become the mandate of the BFSI sector as it gathers information about the person in question and also helps the financial institution know the level of financial risk in which the person is situated. However, there is a need to centralize the KYC documents on computers, and that is where the CKYC process steps in. The CKYC process has been adopted since many years and 80 per cent of the registered users are through RBI. The support of RBI makes CKYC a completely safe and legit process.
What is CKYC?
CKYC is nothing but the Central Know Your Customer process. It is a centralized repository established by the Government of India to keep the customers’ personal information safe and safe with the financial institutions. If we look at the previous KYC procedure, there was no uniformity because each organization has its own KYC portal and procedure. The CKYC platform eases the procedure and centralizes the process on one portal for all the financial institutions of India.
CKYC is not different from KYC. It is a subset of KYC. The CKYC process and portal are established to ensure that the process is centralized and standardized for all financial institutions in India. Some features of CKYC make it different from other forms of KYC. For example,
CKYC is denoted by a 14-digit number that is associated with the customer’s identification number. The information related to the customer and his account is saved in the electronic form in the repository, which is far safer. If any changes are made to the KYC-linked documents, a notification will be sent out to the linked financial institutions. The documents that are submitted are thoroughly checked and validated before storing in the electronic repository.
What Are the Different Types of Accounts Under the CKYC Repository?
There are some specific types of bank accounts that you need to do CKYC with if you possess them. The account types are as follows-
A normal account is a KYC Account that has been converted into a CKYC type when the individual has completed the sign-in process. The normal account is linked with your Aadhar card, your PAN card, and NREGA cad, Passport, driving license and voters icard that are present with the registered user.
The CKYC procedure is also done when the user wants to open a low-risk account. A low-risk customer can open an account with a single KYC form, and it will link him to the CKYC repository. The CKYC process helps businesses in accessing the important information of their users for different financial services.
The small account is the basic type of CKYC account that a person can open. The small account, once opened with CKYC, allows the customer to open single accounts with multiple banks for saving purposes. The Small account types from CKYC can help businesses connect with customers and pitch financial savings account to interested clients. Portability of financial account and ease of bank account opening improves customer relations for the businesses.
OTP-based eKYC account
The OTP-based eKYC account is opened with the help of the CKYC procedure in which the customer has to sign in with a one-time password sent to their smartphones. This OTP verification is the first step of identity verification. All the other essential documents linked with the mobile number can be accessed for the KYC process with the help of the OTP verification method.
These are the various types of accounts linked with the CKYC repository and known to financial institutions around the country.
What Are The Benefits of CKYC For Customers?
Fintech users are all around the country, but there is always a question in their minds: Is the present technology safe and useful to them or not? Before adapting to a new technology, every customer tries to answer this question on his own. CKYC is also a new technology that customers are sceptical about. However, there are many benefits that you should know about.
For example, CKYC is beneficial for both the banks and the customers. While the central repository can aid in better operational efficiency for the banks, it can improve customer experience. Customers can get more personalized services that suit their financial needs. A more in-depth discussion of the benefits of CKYC is as follows-
Time and cost-saving
The use of CKYC is a good way of saving time and cost for the companies. As the CKYC process centralises KYC verification, the fintech companies do not have to set up KYC verification portals and processes of their own. There need to be no duplicate eKYC or KYC checks, which saves a lot of time for the customer and the bank. There are no repetitive actions, and the processes are very efficient in collecting information. There is no need for physical document verification, and so the costs are also reduced for the customers and the banks.
Better security and compliance
The fintech regulations have become stricter as technology becomes more flexible. The Fintech companies, both banks and NBFCs, need to comply with KYC rules and regulations. The centralised, standardised CKYC process ensures that the institutions are compliant. The repository is very secure as it is encrypted and protected by multiple firewalls. The data privacy and protection guidelines ensure that customer information is protected and safe.
The authentication and verification processes ensure that accurate information is stored in the central repository. The data is saved and protected, only to be accessed by authorised authorities. There are no more data breaches and data leakages from the repository. The customers can complete their KYC process just once without any worry.
Moreover, the data that is stored is verified and without any discrepancies. Therefore, it can help in offering better BFSI services to customers and extend better experiences to people. The decisions related to customers and the sector can be taken in an improved, insightful manner.
As we see above, there are a number of reasons why CKYC has been adopted by the government of India. For a country with a growing, large population, CKYC is a way of centralising, organising, and protecting commoners’ financial information. To create solutions for the future of Fintech and use CKYC abilities, partner with a leading fintech company today.