Central KYC Registry – for a better customer onboarding experience with Banks

Shortcomings/Challenges
Initial teething troubles will definitely surface and more so as regulators had issued a short deadline for roll out. Thus, the process of data capturing and system modifications required are yet to be done by most of the entities. But, with the ball already set rolling, these issues could be sorted out very soon. Currently, CKYC has been initiated only for individual entities. Challenges would be manifold when it is rolled out for corporate entities as well. For eg; provision for capturing multiple authorized signatories for various branches, frequent changes of authorized signatories etc. could create operational issues. As this initiative have started only from the month of July 2016, what is the process for Re-KYC in older accounts? These questions will have to be answered. There could also be issues with regards to UCIC, updating KYC of apex and child client ids.
Indian Banks’ Association (IBA) has advised banks to use a common template for uploading details on the CERSAI database. But, some banks would be collecting additional data as part of their customer due diligence and risk management. Thus, adopting a common template for capturing data of customers would be difficult as it would result in dilution of the bank’s customer risk profiling criteria.
Banks will have to ensure a higher level of end-to-end automation of the onboarding process, so as to ease the burden of manual entry, saving both time and cost. Further, as the entity submitting the data to CKYCR is responsible for the KYC check of the customer (which will be used by multiple entities) any lapse by any entity can lead to the serious repercussions. So, there could be more severe KYC verification done by reporting entities, thereby making the first time onboarding process more painful.

Conclusion
Currently, banks and other financial institutions are spending a lot of time and money for KYC verification by way of spot visits, telephonic/postal confirmations etc. Customers also spend a lot of time for providing the same documents to multiple entities. With CKYC, these requirements will no longer be there. Thus, banks will have more time and resources for pursuing new business. On-boarding customers for new products would be much easier for banks and this could pay the path for faster product innovations. Customers would find the onboarding process more hassle free and thus could opt for newer relationships and newer products. The benefits would be even higher for industries like insurance and mutual funds where the penetration levels are lower. They can now ride on the efforts already put in by banks. With the multiple benefits CKYC is offering, it is definitely going to be a game changer for the customers and service providers of financial products.

 Jiz Paul ,Special  General Manager,  Catholic Syrian Bank Ltd 

Photo Courtesy : Google/ images are subject to copyright