High costs, weak tech infra makes KYC a challenge: Fintechs

Fintechs have expressed concern that higher costs and a weak technology infrastructure have made the know-your-customer (KYC) process challenging, especially in tier-3 cities and below.

Recent amendments to Reserve Bank of India’s (RBI) KYC norms in 2023 have left lenders with no choice but to conduct a video customer identification process (V-CIP) or an offline process, which has led to a rise in costs.

“The business model of fintech lenders is digital with minimum physical footprint, thus any physical due diligence in non face-to-face customer onboarding increases the turnaround time and affects uptake of financial services,” said Digital Lenders Association of India chief executive officer Jatinder Handoo.