Difference between eKYC and CKYC

In today's digital age, financial transactions and services have become increasingly streamlined and convenient, thanks to advancements in technology. eKYC (Electronic Know Your Customer) and CKYC (Central Know Your Customer) are two such innovations that have revolutionised the verification process in the financial sector.

What is eKYC?

eKYC, or Electronic Know Your Customer, is a digital method of verifying the identity of individuals remotely. It eliminates the need for physical documents and in-person verification, making the process faster and more convenient for both customers and service providers.

In the eKYC process, individuals provide their Aadhaar card number along with biometric authentication, such as fingerprint or iris scan, to verify their identity. This information is securely transmitted to the concerned authority for verification, reducing the time and effort required for manual checks.

eKYC is widely used in various sectors, including banking, telecommunications, insurance, and mutual funds, to onboard customers quickly and efficiently. It enhances the customer experience by simplifying the onboarding process and reducing paperwork.

What is CKYC?

CKYC, or Central Know Your Customer, is a centralised repository of KYC (Know Your Customer) records of customers in the financial sector. It aims to streamline the KYC process and reduce duplication of efforts across different financial institutions.

Under CKYC, customers need to undergo the KYC process only once, and their information is stored centrally in a secure database. This information can be accessed by financial institutions to verify the identity of customers during onboarding or transactions.

CKYC ensures that customers do not need to submit KYC documents repeatedly when availing services from different financial entities. It promotes efficiency, reduces paperwork, and enhances the overall customer experience in the financial sector.

Differences between eKYC and CKYC

1. Verification process:

• eKYC relies on digital authentication methods such as Aadhaar and biometrics for identity verification.
• CKYC involves the centralised storage and retrieval of KYC records of customers across financial institutions.

2. Scope:

• eKYC is primarily used for remote verification of individuals' identities during onboarding or transactions.
• CKYC focuses on maintaining a centralised repository of KYC records to facilitate seamless verification across financial entities.

3. Implementation:

• eKYC is implemented by individual service providers such as banks, insurance companies, and telecom operators.
• CKYC is implemented at a regulatory level and is maintained by regulatory bodies or designated agencies.

4. Purpose:

• eKYC aims to simplify and expedite the customer onboarding process while enhancing security and compliance.
• CKYC aims to standardise and centralise the KYC process across the financial sector to reduce redundancy and enhance efficiency.

Choosing between EKYC and CKYC

The choice between eKYC and CKYC depends on various factors such as regulatory requirements, operational preferences, and customer convenience. While eKYC offers convenience and speed in customer onboarding, CKYC ensures consistency and reliability in KYC verification across financial institutions.

In conclusion, eKYC and CKYC are two distinct yet complementary systems that have transformed the way identity verification is conducted in the financial sector. Understanding their differences and functionalities is crucial for both service providers and customers to leverage the benefits of digital authentication effectively.

Incorporating eKYC and CKYC into your financial processes can streamline operations, enhance security, and improve customer satisfaction. Stay informed and embrace digital innovation for a seamless financial experience.