Breaking Barriers: How digital and video KYC are redefining the future of banking

in the current banking landscape, “the speed of business has outpaced the speed of traditional security. In the past, banks operated on a timeline of days. When a customer applied for a loan, a human officer had time to look at physical papers and verify details over the phone.

However, we now live in an era where "instant" is the standard. Traditional controls fail because they rely on manual intervention, which creates a massive bottleneck. When a customer expects a loan disbursement in minutes, a manual verification process that takes hours is no longer an option.

This is the velocity mismatch. If the onboarding process is slow, customers will simply move to a competitor who can provide the service faster,” says Gaurav Agarwal, Senior Vice President – BFSI, AuthBridge in an exclusive interaction with Bizz Buzz

Why are traditional fraud prevention and risk controls no longer sufficient in an era of instant digital onboarding and real-time loan disbursements?

In the current banking landscape, the speed of business has outpaced the speed of traditional security. In the past, banks operated on a timeline of days. When a customer applied for a loan, a human officer had time to look at physical papers and verify details over the phone.

However, we now live in an era where "instant" is the standard. Traditional controls fail because they rely on manual intervention, which creates a massive bottleneck. When a customer expects a loan disbursement in minutes, a manual verification process that takes hours is no longer an option.

This is the velocity mismatch. If the onboarding process is slow, customers will simply move to a competitor who can provide the service faster.

Beyond just speed, the nature of fraud has changed fundamentally. We are seeing the rise of hyper-realistic deepfakes and high-quality forged documents created by artificial intelligence.

Traditional OCR (Optical Character Recognition) and human eyes are often unable to distinguish between a real identity and a synthetic one created by a machine. A forged document today looks perfect. It has the right textures, fonts, and holograms.

Traditional systems are reactive and rules-based, meaning they only look for known patterns of fraud. They are not equipped to handle the creative and evolving tactics used by modern fraudsters. Without advanced technology like liveness detection and AI-driven document analysis, banks are essentially leaving their front doors unlocked.

How is KYC evolving from being viewed purely as a compliance requirement to becoming a strategic growth enabler, especially with the rise of digital and video KYC?

For decades, KYC (Know Your Customer) was seen as a "check-the-box" exercise. It was a chore that banks had to do to avoid fines from regulators.

However, we have realised that the way you handle KYC directly dictates how fast you can grow. In the world of business, friction is inversely proportional to scale. If there is a lot of friction in your process, you cannot scale.

In the old model, KYC required customers to visit a physical branch, stand in line, and present original documents to an agent. This limited a bank’s growth to the number of branches it owned and the number of agents it could hire. Digital and video KYC have completely changed this math.

Now, a person living in a remote village can open a bank account or apply for credit from their smartphone in just a few minutes. By removing the need for physical presence and manual paperwork, banks have turned a regulatory hurdle into a seamless digital gateway.

This frictionless experience is the reason why we have seen a massive boom in fintech products. KYC is no longer just about security; it is about providing a superior user experience that allows a business to acquire millions of customers at a very low cost.

In what ways are automation and data-driven risk checks improving both audit readiness and overall customer experience for BFSI players?

Automation serves two masters at the same time: the customer and the auditor. From the customer’s perspective, automation makes the banking experience feel invisible.

Instead of asking a customer to upload their tax returns or utility bills, automated systems can pull this data directly from trusted government or financial databases in the background.

This means the customer provides less information but receives a faster decision. It creates a feeling of trust and efficiency that keeps customers loyal to a brand.

For the bank, automation is the ultimate tool for audit readiness. In the manual world, preparing for an audit was a nightmare. Teams had to search through thousands of paper files to prove that they followed the right steps for a specific customer.

With data-driven checks, the system creates an automated and immutable digital record for every single transaction. Every check, every verification, and every approval is timestamped and stored. When a regulator asks for proof of compliance, the bank can produce a complete report in seconds.

This eliminates human error and ensures that the bank is always in a state of "permanent readiness" for an inspection. It moves compliance from a stressful event to a continuous, background process.

What role is RegTech increasingly playing in strengthening compliance across BFSI — particularly in areas such as AML screening, sanctions monitoring, and audit-ready frameworks?

RegTech, or Regulatory Technology, is essentially the central nervous system of modern compliance. Its most important role is in Anti-Money Laundering (AML) and sanctions monitoring. In the past, screening for "bad actors" involved checking names against a list.

This led to many "false positives" because many people share the same names. RegTech uses sophisticated algorithms to look at more than just names; it analyzes behaviour, geographic patterns, and connections between entities. It can scan millions of global records in real-time to ensure that a bank is not doing business with a sanctioned person or a known criminal.

Furthermore, RegTech provides a framework that is built for the digital age. It allows banks to update their compliance rules instantly as new laws are passed. Instead of retraining thousands of employees, the bank simply updates its software.

This ensures that the institution remains compliant across different countries and jurisdictions without any downtime. By using these tools, BFSI players can focus their human talent on high-level strategy and complex cases, while the technology handles the repetitive and data-heavy tasks of monitoring and reporting.

Why is the continuous monitoring of employees critical in BFSI, and how does it act as a deterrent to fraud?

While we spend a great deal of time protecting the bank from external threats, the internal threat is often more dangerous. Employees in the BFSI sector have access to sensitive data, customer funds, and the internal systems that move money.

Because they know how the controls work, they also know how to bypass them. This is why continuous monitoring of employees is not just a policy but a necessity.

The goal of continuous monitoring is to create a culture of accountability. When employees know that their actions and background are being checked periodically, it acts as a powerful deterrent. They are much less likely to engage in fraudulent activity if they know the risk of being caught is high.

To be effective, this monitoring must go beyond a simple background check at the time of hiring. People’s lives and circumstances change. An employee who was honest five years ago may find themselves under financial pressure today, which could lead to poor decisions.

To maintain a safe environment, BFSI institutions must implement several types of periodic checks. Lifestyle checks are essential for identifying employees whose spending habits suddenly far exceed their known income.

This can be a primary red flag for bribery or internal theft. Criminal and drug checks should also be conducted on a regular basis.

A new criminal record or a substance abuse problem can significantly change an employee's risk profile.

Finally, regular financial health checks can help the bank identify employees who are in deep debt and may be vulnerable to coercion or temptation. By staying proactive and watching for these signs, a bank can stop an internal fraud event before it even starts.