KYC stands for Know Your Customer. KYC is the process of knowing the details of your customers. It is a method of verification by a company, most often a lender, to identify the customers it is lending money to.
Simply put, KYC is the practice that is carried out by a company to verify the details of customers. Its purpose is to ensure that a customer is using the services of an organization only for legal and not for money laundering services.
Companies do KYC of customers while onboarding them. Nowadays, the eKYC process is being conducted for faster onboarding of customers.
How is the eKYC verification online done?
These days, the eKYC process is being done using Aadhaar-based authentication.
In this, a One-Time Password (OTP) is sent to mobile numbers of users registered with Aadhaar.
What is the relevance of the eKYC verification online?
The banking and finance industry are two complex sectors while talking about customer relations. They are at risk to face a number of risks related to illegal financing and money laundering.
To ensure that only legal and genuine customers are enrolled in the eKYC, Aadhaar-based OTP authentication is done.
It ensures the onboarding of genuinely legal customers. It is why new customers and existing users’ KYC is done.
Active customers are also verified from time to time to ensure they use their services for legal purposes.