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Top 4 Challenges in Re-KYC for Banks & How Phygital Solutions Solve Them

Re-KYC Challenges

Keeping customer information updated through periodic re-KYC is a non-negotiable task for banks in India. It's a critical part of staying compliant and secure. However, the process is often loaded with significant Re-KYC challenges in banking that get in the way of efficiency and create headaches for both you and your customers. The good news is that innovative 'phygital' approaches are changing the game by offering a complete and practical solution to these problems.

Understanding the Complexities of Re-KYC for Banks

Re-KYC is the process that updates existing customer identity, address information periodically, and ensures all data is up-to-date. But let's be real: asking customers to update their information regularly is tough. The regulations are strict, and the operational effort required is huge. For banks, it's a constant balancing act between meeting compliance demands and keeping the customer experience smooth.Re-KYC is also different from CKYC. While CKYC is a centralized government repository for KYC data, Re-KYC focuses on periodically updating and verifying a customer’s details according to their risk factors with the bank, and meeting their compliance and risk requirements.

The Regulatory Mandate and Its Operational Strain

The Reserve Bank of India (RBI) has clear guidelines for Re-KYC, requiring banks to update customer data at regular intervals. While this is essential for security, these recurring mandates put a massive strain on banks' resources. It requires time, money, and manpower to manage these cycles, which often leads to a less-than-ideal experience for your customers.

Understanding Common Re-KYC Challenges Banks Face

Beyond the basics, there are broader KYC challenges banks face that get even more complicated during Re-KYC time, such as:

Challenge 1: Low Re-KYC Participation By Customers

One of the biggest hurdles is getting customers to participate. Many find the process inconvenient. Asking them to take time off work to visit a branch creates a lot of friction. Even digital alternatives like online portals or video KYC often fail to solve this, as many customers, especially individuals in remote areas, struggle with unstable internet or find the technology difficult to use. Many elderly or rural customers also prefer in-person interactions over digital channels, as they trust face-to-face assistance more than online portals or video calls.

This reluctance often leads to incomplete re-KYC, forcing banks to issue warnings or even freeze accounts, which results in a poor customer experience and strained relationships.

Challenge 2: Inefficient Re-KYC Operations Without Real-Time Reporting

Another major issue banks face during re-KYC is operational inefficiency, which often stems from reliance on outdated manual processes. However, integrating a network of highly trained, on-ground agents equipped with the skills to assist customers efficiently and operate with GPS tracking and real-time monitoring can ensure the accountability and smooth execution of the process.

  • GPS Tracking: All agents are tracked via GPS, ensuring timely and location-specific service to customers. This minimizes delays and restricts fraud.
  • Trained Agents: The agents are extensively trained to handle customer queries, conduct biometric verifications, and manage re-KYC processes professionally, reducing errors and enhancing the overall efficiency.
  • Real-Time Monitoring: The entire process is monitored in real-time, ensuring agents adhere to standards and regulations, and guaranteeing 100% compliance while keeping the process smooth for the customers.

Challenge 3: Ensuring Compliance Across Diverse Customer Segments

India’s vast and diverse population base creates a unique challenge for banks in maintaining consistent compliance with Re-KYC. A process that works for a tech-savvy customer in a city might not work for an elderly person in a rural village.

For example, a farmer may not have easy access to a branch or the digital literacy to complete an online Re-KYC form. Making sure that each customer, irrespective of location or digital literacy, can complete their Re-KYC is a massive logistical challenge for banks.

Challenge 4: Managing Large Volumes and Periodic Spikes

Finally, banks have to deal with the sheer volume of Re-KYC requests. The workload isn't steady; it spikes, especially when regulatory deadlines are approaching. Managing these periodic surges without a scalable system in place is a struggle. It can overwhelm your staff, lead to backlogs, and increase the risk of missing critical deadlines for Bank compliance with Re-KYC.

Phygital Banking Solutions for KYC: The Holistic Answer to Re-KYC Challenges

So, how do you solve these problems? The answer lies in Phygital banking solutions for KYC. This innovative approach combines the speed and convenience of digital technology with the trust and reach of in-person service. It tackles the biggest Re-KYC challenges head-on. This approach also helps banks build trust among customers by combining secure digital validation with local, familiar agents who assist customers personally.

The Synergy of Digital and Physical KYC Integration

The core idea behind phygital is the seamless physical and digital KYC integration. Here is how it works:

  • Digital platforms handle the heavy lifting, like data collection, document validation, and workflow management.
  • At the same time, a network of on-ground, highly trained agents handles the parts that need a human touch, like agent-led doorstep KYC with digital biometric verification, customer assistance, and reaching there where technology is still a challenge.

This integrated model directly reduces friction, which eventually boosts participation rates. Automating data checks with real-time validation improves accuracy and reduces errors.

How Phygital Drives Efficiency and Compliance in Re-KYC

This integrated model is one of the most effective Re-KYC solutions for banks. It makes the process more accessible for all customers and increases participation rates. By incorporating advanced real-time reporting and monitoring tools, banks can:

  • Enhance Oversight: Utilise dashboards that provide real-time visibility into re-KYC progress, enabling proactive management and timely interventions.
  • Improve Accuracy: Leverage tools that track and audit every step of the re-KYC process, ensuring data integrity and compliance.
  • Optimise Resource Allocation: Analyze real-time data to identify bottlenecks and allocate resources efficiently, reducing delays and operational costs.

Manipal Business Solutions: Your Partner in Seamless Re-KYC

At Manipal Business Solutions, we understand the Re-KYC challenges in banking inside and out. Our 'phygital' services are designed to provide an effective and seamless KYC and Re-KYC solution. We deliver end-to-end doorstep fulfillment for Re-KYC, powered by our massive network of over 4,000 field agents and secure digital tools, like real-time validation and biometric verification. Our operations are carefully organized by pin codes, ensuring each Re-KYC lead is assigned to a local agent. This structure shortens turnaround time and helps customers feel more comfortable during the process.

We believe in being the "One Nation, One Partner" that banks can rely on to handle their compliance needs efficiently. Our approach not only helps you meet your regulatory requirements but also supports the larger goal of driving financial inclusion across India. Let us help you make your Re-KYC process simple, secure, and stress-free.