Aadhaar enabled e-KYC could save Rs 10,000 crore for banks, telecom operators: Report

NEW DELHI: As per a recent study conducted by MicroSave, a leading development consulting firm, if banks and telecom operators in India start using Aadhaar enabled e-KYC process for customer acquisition (opening bank accounts and registering new customers), they can save an estimated Rs 10,000 Crores over the next five years.

Apart from substantial cost savings for banks and financial institutions, Aadhaar enabled e-KYC is significantly more efficient compared to current paper-based KYC. Customer enrolment processes followed by banks also take longer time and it can be two to four weeks before an account is activated.

Whereas Aadhaar e-KYC enabled bank accounts can be activated and ready to transact in a few minutes.

With Aadhaar enrolment covering nearly 97% of adults in the country, in a very timely analysis, the study highlights that the use of Aadhaar based e-KYC could provide a number of benefits to service providers like banks and MNOs.

Given that e-KYC provides near instant verification of customers’ identity and their address, substantial cost reduction can be achieved through elimination of paper based verification, movement and storage being replaced by digital processes.

Further, automation of the KYC verification process leads to a more efficient process that takes less time, thereby offering faster customer on boarding.

The existing practices prevailing in Indian banks are majorly paper based manual KYC processes. There is also a widespread tendency at banks towards over compliance for static KYC, compared to dynamic risk profiling of customers based on transaction data and analysis. It results into incurring heavy costs for banks and a poor customer experience through delays and inconvenience.

In order to avoid repeated KYC verification for customers availing multiple services, there is a need and an opportunity for greater harmonisation of KYC processes across diverse financial institutions and indeed with players in the telecom sector. This will speed up the process and result in massive cost savings.