Video KYC: Pros, Cons and Key Differences [2025]

Financial institutions spend millions on sleek mobile apps and instant payments. Their websites load in milliseconds. Their chatbots answer at 3 AM. And yet, when it comes to the most crucial part – verifying who their customer is – they still rely on lengthy back-and-forth document submissions, manual verifications, and processes that take days or even weeks to complete.

It’s a peculiar mismatch, isn’t it? 

But interestingly, the tools to fix this mismatch already exist. Video KYC has matured into a solution that brings verification in line with your other digital processes. 

If you’ve got any doubts related to Video KYC – what makes Video KYC work, what challenges you might face, and most importantly, how to implement it successfully in your organization – this guide has everything you need to know. Takes 7 minutes.

Let’s start with nuts and bolts.

What is Video KYC?

Video KYC is a remote identity verification method that replaces traditional in-person verifications by enabling organizations to authenticate customers through live video interactions. It’s also called video-based customer identification process (V-CIP), vKYC, or video verification.

In short, businesses no longer need to rely on physical meetings for customer identification – instead, everything happens through a secure video call. Of course, it’s not just a simple video chat – there’s much more happening behind the scenes.

So what exactly happens during Video KYC? Well, a verification agent conducts a live video interview where customers show their ID documents to the camera. At the same time, specialized software performs several automated checks. Some technologies that work hand in hand during the Video KYC process are:

• Optical Character Recognition (OCR) to instantly read and verify document details
• Advanced facial recognition to match the person with their ID photo
• Liveness detection to ensure it’s a real person, not a recorded video
• Encryption to protect all transmitted data

While you might have figured out the differences between Video KYC and Traditional KYC by now itself, why not have a bit more clarity? The next section sums up everything!

Difference Between Video KYC and Traditional KYC

When it comes to verifying customer identities, businesses have two main options: stick with traditional KYC or switch to Video KYC. And yes, while both get the job done, they work in completely different ways.

You see, traditional KYC has been around for ages – we’re talking about those familiar branch visits where customers show up with stacks of documents. It works, sure, but let’s be honest – it’s not exactly winning any points for efficiency. 

Video KYC, meanwhile, takes all those familiar verification steps and moves them online. Here’s how video KYC and Traditional KYC differ from each other.

Aspect	Traditional KYC	Video KYC
Process	Requires in-person visits to branches. Multiple touchpoints needed for verification.	One-time video call where everything gets verified in real time. Agent guides the customer through each step.
Document Submission	Physical documents needed. Multiple copies are often required. Risk of document loss.	Digital submission during a video call. OCR technology instantly verifies document authenticity.
Time Efficiency	Days or weeks to complete. Multiple visits are often needed. Manual processing causes delays.	Usually completed in 5-10 minutes. A single session covers all requirements.
Customer Experience	Often frustrating due to wait times and branch visits. Business hours limitation.	Convenient and flexible. It can be done from anywhere at preferred times.
Security and Fraud Prevention	Relies heavily on human judgment. Document forgery can be harder to detect.	Multi-layer verification, including AI checks, liveness detection, and recorded sessions for audit trails.
Geographical Limitations	Limited to branch locations. Difficult for remote customers.	No geographical barriers. Accessible from anywhere with an internet connection.
Accuracy	Prone to human error in document verification and data entry.	AI-powered verification reduces errors. Automated data extraction ensures accuracy.

Video KYC Benefits

When businesses consider adopting Video KYC, they often focus first on immediate gains like cost savings. But the reality is, the benefits run deeper than just operational improvements. 

What makes Video KYC truly valuable is how it changes both business operations and customer experience at the same time.

Let’s look at the key advantages that make Video KYC worth considering for your business. 

1. Cuts Operational Costs by Eliminating Physical Infrastructure

Obviously, it was expected, right? Let’s understand how. Think about it – no need for dedicated verification branches, document storage, or extensive paperwork processing. Plus, your verification teams can handle more cases each day without compromising on thoroughness. The shift from physical to digital verification naturally brings down per-customer verification costs.

2. Reduces Customer Verification Time – Faster Onboarding

Video KYC shrinks lengthy verification cycles into a single video call. No more back-and-forth with documents or scheduling multiple visits. Your staff handles everything – from ID verification to liveness checks – in one smooth session. This rapid turnaround particularly helps in competitive markets where onboarding speed matters.

3. Expands Your Market Reach Beyond Physical Locations

With Video KYC, your business can verify customers from any location with internet access. This means you can enter new markets without setting up physical verification centers. For growing businesses, this scalability is particularly valuable.

4. Strengthens Fraud Prevention Through Multi-Layer Security

During each video call, multiple security checks run simultaneously. Liveness detection ensures you’re dealing with a real person, not a recording. Facial recognition confirms the person matches their ID. Every session gets recorded and encrypted, creating a clear audit trail. These layers of security make fraud attempts significantly harder.

5. Creates Better Customer Experience Through Convenience

Put yourself in the customer’s shoes for a moment. Would you like to visit branches during work hours, especially when you know some solutions exist? Probably not. With Video KYC, your customers can complete verification from their preferred location at a time that works for them. This convenience makes customers happy and reduces dropout rates during onboarding, too.

6. Simplifies Regulatory Compliance with Digital Audit Trails

Every video KYC session gets recorded and stored securely. These digital records make it easier to demonstrate compliance during audits. Plus, the standardized verification process ensures consistent compliance across all customer verifications.

Video KYC Challenges and Limitations

Now, while these benefits make Video KYC sound like a perfect solution, let’s keep it real – no technology is without its challenges. 

Let’s look at some of these challenges in the next section so you can better understand if Video KYC is the right fit for your business.

Mainly, there are 5 challenges you’ll face.

1. High Initial Technology Investment Required (Solution Exists)

Getting started with Video KYC? Be ready to invest because you’ll need secure servers, AI tools, encryption systems, and more. Small businesses often find this initial cost particularly challenging. Yes, the long-term savings are there, but that first investment hurdle is significant. However, third party solutions emerge as a life saver here – they let you connect their existing technology in your infrastructure via APIs.  

2. Internet Connectivity Makes Things Tricky

It’s 2025, and we’re still talking about internet issues. Surprising? Not really. Video KYC needs stable, high-speed internet – something that’s not guaranteed everywhere (your customers can be in a remote area, right). Poor connections lead to fuzzy videos, failed document scans, and frustrated customers who might need to restart the whole process.

3. Digital Hesitancy is Still Real

Some customers simply prefer the traditional way. Maybe they’re not tech-savvy, or perhaps they just trust face-to-face interactions more. You’ll need to consider this reality. Sometimes, maintaining both traditional and video KYC options becomes necessary.

4. Technology Dependencies Create New Vulnerabilities

System downtime? Technical glitches? These can bring your entire verification process to a halt. Unlike traditional KYC, where paper processes can continue during computer outages, Video KYC is completely dependent on technology working smoothly.

5. Implementation Isn’t a Weekend Project

Yes, implementing Video KYC takes time – a minimum of two weeks for planning, testing, training, and fine-tuning. Some businesses learn this the hard way. Rushed implementation is a risk that is not worth taking.

The good news? None of these challenges are deal-breakers. In fact, with proper planning and the right approach, they’re all manageable.

How to Implement Video KYC

Implementing Video KYC is a significant decision that needs careful planning. The first question many businesses face is whether to build an in-house solution or opt for ready-to-use technology. Sure, large banks with massive IT teams might choose to build everything from scratch, but is that really necessary for most businesses?

Think about what you actually need: secure video calling, document verification, face matching, and compliant data storage. Then, consider the time and resources needed to develop and maintain each of these components. Not to mention keeping up with evolving security standards and regulatory requirements.

This is where modern APIs come into the picture – they offer the perfect middle ground.

You get enterprise-grade verification technology without the headaches of building it yourself. Plus, you can integrate these solutions with your existing systems, making the transition smoother for both your team and customers.

If you’re weighing the costs of building your own Video KYC system against ready solutions, here’s something to consider: Signzy’s comprehensive API suite gives you everything you’d build in-house, minus the development headaches and maintenance costs. 

We’re talking secure video verification, smart document processing, precise face matching, and rock-solid compliance – all through one integration within 2-3 weeks. Explore more.