Streamlining customer identification programs through effective central KYC (CKYC) integration has become imperative for banks worldwide. In 2022, the market value for verification (e-KYC) in banks surpassed $1.3 million, which underscored its critical role in enhancing operational efficiency and compliance. Notably, Indonesia alone saw approximately 34.61 million new bank accounts opened during the same period, which highlights the scale and importance of identity verification systems in managing unparalleled growth while mitigating risks associated with financial transactions. As banks adapt to meet regulatory requirements and customer expectations, the adoption of CKYC stands out as a pivotal strategy to ensure seamless banking experiences.
Let’s explore the complete CKYC procedure to ensure a seamless CKYC procedure in the financial institution and combat the troubles of continuously conducting the authentication procedure each time when getting financial services.
Comprehend the Complete Central Know Your Customer (CKYC) Process – Explore 8 Major Steps Involved
CKYC is utilized to validate customers in real-time and is stored in a centralized repository as part of India’s central know-your-customer program. The centralized storage of customers’ essential credentials within one place helps financial institutions scrutinize them well. When needed, the relevant department that acquires the verification process would ask the centralized repository wo provide all the required information related to the customers. The eight major steps involved in executing the central Know Your Customer program are given below:
Customer Onboarding
All the potential departments who acquire the authentication procedure, such as financial institutions, banks, mutual funds, and insurance companies, have to conduct a complete KYC (know your customer) protocol before opening a bank account. It should be executed prior to receiving the financial services.
Credentials Collection
To ensure compliance with KYC, the potential individuals have to provide the required identity credentials and, majorly, the proof of address documents or any additional credentials that may be requested by the relevant departments. The required documents that are demanded by the potential departments are utility bills, Adhhar cards, voter ID cards and PAN cards. These identity credentials are usually acceptable.
Authentication
Banking departments and related financial institutions verify customers’ submitted credentials by scrutinizing the paperwork and other provided information. The Unique Identification Authority of India (UIDAI) is an authorized agency that validates the user’s UID number in real-time.
Establishment of CKYC Profile
The Central KYC Registry in India, operated by CERSAI, centralizes user data from financial institutions during KYC verification. It serves as a repository for securitization, asset reconstruction, and security interests.
CKYC Number Generation
The 14-digit CKYC number is generated after a customer’s credentials have been successfully uploaded to the CKYCR. The identifier is linked with the customer’s KYC record in the centralized databases.
System Compatibility
The designated CKYC number is assigned to potential customers and can be utilized during the registration process in financial institutions and intermediaries. The potential customers can open new bank accounts without executing the KYC process each time.
Entry and Revisions
To authenticate the customer’s KYC status, the financial institution’s authorizations can access the CKYC in real-time through encrypted web channels. It is compulsory for the financial institutions to update the KYC credentials in the CKYR with any revision required.
Regulatory Compliance
KYC regulations from the Reverse Bank of India and other potential organizations can be encountered using CKYC protocols, which are considered a valuable asset for financial institutions. There will never be incidents of money laundering or related terror funding if the KYC process is regulated consistently.
Use Cases of CKYC Solutions in Potential Industries
CKYC solutions make the validation process more convenient and authentic as it is utilized to scrutinize credentials that are already stored in the repository. The potential industries in which the CKYC process is regulated are given below:
- Non-Banking Financial Organizations
- Mutual Funds
- Banks and Financial Institutions
- Insurance Companies
- Brokers and Depositories
The Bottom Line
CKYC is an enhanced version of the know your customer protocol because it has streamlined the whole authentication procedure by storing all the customers’ required credentials in one place. The repository acts as the central place where all the acquired information and even documents are saved, which are usually acquired by the financial institutions during the onboarding process or giving access to potential customers. The ensurance of the CKYC in the central governments helps in streamlining procedures in the potential enterprises and the banking departments.