KYC, eKYC, and CKYC are three distinct processes in the financial and digital sectors that aim to verify the identity of an individual or entity. While the goal of all three is the same—ensuring security and regulatory compliance—their processes, technologies, and uses differ.
KYC: Know Your Customer
KYC is a traditional process used by financial institutions and businesses. Its purpose is to verify customer identity and reduce the risk of fraud, money laundering, and terrorist financing. Customer identification is verified through government-issued identification cards, proof of address, and other required documents. This ensures secure and reliable transactions.
eKYC: Electronic Know Your Customer
eKYC is the digital form of traditional KYC. Identity is verified remotely using biometrics, OTP (One-Time Password), and Aadhaar authentication. It is a fast, convenient, and paperless process. Its use enables easy onboarding and transactions in the banking, telecom, and digital finance sectors.
CKYC: Central Know Your Customer
CKYC is a centralized database of KYC records. Its purpose is to simplify and speed up the process by sharing KYC (Know Your Customer) information between various financial institutions. The advantage is that customers can update their details simultaneously across multiple institutions, reducing paperwork. A centralized system reduces the likelihood of duplicate records and fraud.
Key Differences Between KYC, CKYC, and eKYC
Differences in Efficiency
KYC: Traditional KYC involves manual paperwork and in-person verification, which is time-consuming and labor-intensive.
eKYC: Using digital technologies such as Aadhaar authentication, OTP, and biometrics, the process becomes faster and paperless.
CKYC: By centrally storing investor data, it eliminates the need for repeated KYC checks, saving time and simplifying processes.
Security Differences Also
KYC: Security risks exist due to manual errors and document forgery.
eKYC: Digital authentication technology reduces the risk of identity fraud through OTP and biometrics.
CKYC: A centralized and secure database increases the security of investor data and ensures compliance with regulatory standards.
Differences in Access
KYC: Traditional KYC can be challenging for people living in remote areas or those who lack documents.
eKYC: Online verification allows the process to be completed from the comfort of their homes, improving accessibility.
CKYC: Centralized data allows investors to easily update their KYC across multiple financial institutions, enabling seamless transactions.
Regulatory Compliance Also Different
KYC: Traditional processes comply with regulations, but standardization and efficiency may be limited.
eKYC: Regulatory compliance is easier and faster through a digital and standardized process.
CKYC: A centralized data platform ensures consistency and transparency across financial institutions.