Fintech companies brace for increase in their expenses

MUMBAI: The Supreme Court’s order that private entities cannot avail Aadhaar data, is expected to hit the fintech industry, which rides on electronic know-yourcustomer (E-KYC) for onboarding customers, because the expense of completing the verification needs are sure to skyrocket, say executives of fintech firms. E-KYC allows fintech companies to onboard customers to offer financial services such as mutual funds and e-wallets through Aadhaar and a one-time password (Otp)-based KYC.

“The SC has tried hard to untangle the Aadhaar knot and has provided a reasonably balanced verdict. What is yet to be clear is what about the optional use of Aadhaar in private sphere for doing voluntary identify establishment through the E-KYC mechanism. We are awaiting interpretation of the rulings in this regard. It is important part in the ecosystem,” said Srikanth Meenakshi, co-founder of Fundsindia.com, a mutual fund fintech firm.

The alternative to E-KYC is the verification of physical documents, which is neither convenient nor cost-effective. “E-KYC provides convenience over an offline process. The power is now left to the consumers to provide Aadhaar to private entities. Using physical documents is not practical. E-KYC with OTP is fully secure,” said Adhil Shetty, founder of online financial marketplace Bankbazaar.com.