 "Banks tighten on-boarding with video KYC, experts explain why")
As digital fraud cases rise across Indian banking system, lenders are changing the way they verify new customers. Video-based know-your-customer (video KYC) is increasingly being preferred over Aadhaar-based electronic KYC, because it is no longer seen as strong enough to prevent misuse.
At the heart of the shift is the growing problem of mule accounts -- bank accounts opened in one person’s name but used by fraudsters to move stolen money.
What video KYC does differently
Aadhaar-based eKYC primarily confirms whether identity credentials exist. It does not confirm who is actually using them. That gap has become costly.
“Verifying data alone is not enough. Aadhaar-based eKYC confirms that credentials exist, but it does not confirm who is actually using them,” said Reeju Datta, co-founder, Cashfree Payments.
Video KYC addresses this by establishing live presence through facial biometrics, liveness checks, document validation, and geo-tagging, making impersonation and synthetic identity fraud much harder.
Unlike document-only checks, video KYC involves a live interaction with a trained agent. Behavioural cues, facial matching against government IDs, and real-time checks for deepfakes or spoofing add multiple layers of protection.
Why banks are preferring it now
While the Reserve Bank of India allows limited eKYC-based accounts, banks face higher scrutiny when fraud emerges later.
“Video KYC gives banks a defensible compliance posture. It satisfies full customer due diligence and provides evidence when mule accounts surface,” said Raheel Patel, partner, Gandhi Law Associates. Fraud trends may be the trigger, but regulatory comfort and internal risk controls are why the shift is sticking, he added.
For banks, video KYC also allows accounts to be fully operational from day one, rather than restricting usage until physical verification is completed.
How does the process work for customers?
From a customer’s perspective, video KYC typically involves:
- Joining a live video call through a mobile phone
- Showing PAN and Aadhaar on camera
- Completing facial and liveness checks
- Answering basic verification questions
According to Datta, AI-led video KYC systems can complete full RBI-compliant checks in under three minutes, compared with the industry average of eight to ten minutes.
Does video KYC exclude some users?
Challenges remain for elderly customers, rural users, and those with low digital literacy.
“Tier-V and Tier-VI villages often lack reliable bandwidth, and elderly customers may struggle with technology or fingerprint failures,” said Akash Lamba, senior associate, SKV Law Offices. Banks are addressing this through assisted video KYC, flexible time slots, low-bandwidth platforms, and RBI-permitted support from family members during verification.
The broader direction is clear.
Banks are strengthening controls without forcing customers back into branches, signalling that video KYC is becoming the new backbone of secure digital on-boarding in India.