KYC refers to the process by which the trading platform obtains customer-related identification information. Its purpose is mainly to ensure that users who do not meet the standards cannot use the issuance services provided by the platform, and at the same time can provide law enforcement agencies with investigations in some future criminal activity investigations. E-KYC is a regulatory policy that has developed and applied worldwide to curb identity theft, frauds, and money laundering. The e-KYC facilitates the completion of the KYC process online, eliminating the need for filling up physical forms and submission of physical documents. It’s the main objective to register the customer with the least amount of paperwork and in the shortest possible time.
The India e-KYC market estimated to grow at a significant CAGR over the forecast period, 2020-2027. The growth of the market can be attributed to the rising demand for the growing need for Know Your Customer in legal and financial institutions. Additionally, the surge in adoption of digital payment modes; and using advanced analytics for the provision of proactive risk alerts will drive the growth of the market. Further, the growing usage of e-KYC to enable faster onboarding in a secured and compliant manner will augment the growth of the India e-KYC market size in future periods. Also, the government regulations Prevention of Money Laundering Act in 2003 for preventing and control money laundering will influence the e-KYC industry.
Moreover, the increasing demand for e-KYC integrated with advanced technologies such as AI, machine learning, and intelligent automation to better combat money laundering are anticipated to propel the growth of the India e-KYC market industry in the future periods. Also, the benefits of e-KYC, such as overarching goals to advance a person’s access to services, reduce identity fraud, and increase financial inclusion in banking and financial institutions are positively impacting the growth of the market. Furthermore, the introduction of AI and machine learning to offer seamless customer experience and minimize identity fraud are projected to fueling the growth of the market in the coming years.
The government of India regulated a Prevention of Money Laundering Act in 2003, intending to prevent and control money laundering by disruptive elements. Under this act, RBI mandated all financial institutions should follow the rules for financial services and also IRDA, SEBI followed suite and mandated KYC for the entities that come under their regulation. The major objective of this act to prevent fraud, money laundering, and terrorist funding.
Further, the new version of the PML Rules permitted by the Supreme Court to use Aadhaar-based eKYC through any financial service providers can use remote-based e-KYC to verify the identity of Indian consumers electronically.
Technological advancement has opened up more opportunities for central bank digital currency and digital payment. In India, mobile payment is becoming more and more common, and the frequency of using cash is significantly reduced. According to NITI Aayog, the digital payments market in India is expected to grow to the US $ 1 trillion by 2023, led by growth in mobile payments, presenting tremendous business opportunities for players in the digital space.
The recent outbreak of a pandemic, COVID-19, has severely impacted the economies worldwide. Major cities in India are under lockdown with operations of industries temporarily suspended. Due to the rapid increase in the number of cases and sometimes no obvious way of spreading, many suspicious banknotes are the main culprits leading to the untraceable virus spread. The increased awareness of community health has made the bank’s digital currency the focus of attention, thus strengthening the need to better protect payment methods from various potential threats.
Although digital payments are convenient to use and can effectively solve the spread of viruses, in reality, they do pose problems and barriers to entry for consumers who do not have bank accounts and are older.
Based on type, the India e-KYC market bifurcates into Aadhaar e-KYC and Video-based KYC. The Aadhaar e-KYC segment accounted for the largest market share in 2019 attributable to banks, Telcos and some government organizations are using Aadhaar based authentication for customers. It helps in instant digital payment.
The Video-based KYC will grow with a substantial rate during the forecast period owing to the use of AI and machine learning technology in authenticating the document and identity of the customer by matching the recorded video and documents submitted.
Based on the component, the India e-KYC market bifurcates into Software and Services. The Software dominated the India e-KYC market with the highest market share in 2019. The growth of the segment can be attributed to the growing adoption of advanced technologies such as AI, machine learning, and intelligent automation for the remote onboarding of customers.
Service is anticipated to register the highest CAGR in the forecast period due to its increase in customer satisfaction and provide the highest levels of security.
Based on the deployment model, the India e-KYC market segregated into Cloud and On-Premises. The on-premises segment accounted for the major market share in 2019. It is due to on-premise providing benefits to the organization to use their server to ensure data safety.
Cloud will grow at a significant rate in the forecast period. It is owing to the organization’s SaaS-based e-KYC solution, which enables cost-effective access to the cloud-based deployment of the e-KYC solution.
Based on the end-user industry, the India e-KYC market segmented into Banking Industry, Financial Institutions, E-payment Service Providers, Telecom Companies, Government Entities, Insurance Companies, and Others. The Banking Industry held higher market potential in 2019. It is attributed to growing adoption for e-KYC for digital and remote exchange of the traditional KYC process and lower cost in an optimized method.
The Financial Institutions segment exhibits a lucrative market share in 2019 and expected to generate significant revenue during 2020-2027. Owing to e-KYC helps in the remote onboarding of the customer and useful in preventing the anti-money laundering compliance & risk assessment.
Based on geography, the India e-KYC market segmented into North India, South India, West India, and East India. North India estimated to occupy the lion’s share in the e-KYC market by 2027. It is owing to the surge in digital transactions along with the growing adoption of e-KYC by various banks, financial institutions, and NBFC for speedily authenticating millions of customers.
South India occupied a prominent share of the e-KYC market due to the digitalization of the banking industry, along with the rising anti-money laundering and frauds in the banking industry and financial institutions.
Companies such as Veri5Digital, Signzy, Videokyc, Signdesk, Syntizen, IDfy, Equifax, Inc., Digio, Trulio, Wipro Technologies, Tata Consultancy Services (TCS) and inVOID, are the key players in the India E-KYC Market.
By Deployment Model
By End-User Industry