Contact Point Verification: What You Need to Know

In recent years, there has been a significant rise in fraudulent financial activities. Banks and financial institutions have witnessed a growing number of fake loan applications, identity theft cases, and suspicious insurance claims. These events not only lead to financial losses but also severely affect customer trust. In response to this growing concern, several institutions have adopted stronger verification processes. One such process is Contact Point Verification (CPV).

What is Contact Point Verification?

Contact Point Verification (CPV) is a physical verification process used by banks and financial institutions to confirm the details provided by a customer during a loan or credit application. It involves visiting the customer’s residence, office, or both to verify their identity, address, and employment status. CPV helps confirm that the applicant was reachable at the stated contact points during the verification process. Third-party agencies conduct the process and record the findings in a CPV report. 

Why is Contact Point Verification Important?

CPV is important for the following reasons:

• Regulatory Compliance: Financial institutions must comply with Know Your Customer (KYC), Anti-Money Laundering (AML), and other legal guidelines. CPV acts as a supporting step in these verification processes.
• Risk Mitigation: By verifying the contact points, businesses reduce the risk of dealing with fake profiles, unauthorised access, or fraudulent transactions.
• Customer Trust and Security: It assures that communications are reaching the correct recipient. This is particularly important for sensitive information, such as account alerts and transaction confirmations.
• Operational Accuracy: Incorrect customer contact information can lead to operational inefficiencies, undelivered notices, and poor customer experience.

Real-Life Use Cases of Contact Point Verification

Here are some of the industries and scenarios where CPV is commonly used:

Digital Lending Platforms

In digital lending, quick disbursal and low risk go hand in hand. This is where an address verification service becomes critical. Before approving a loan, the lending platform verifies whether the borrower is reachable using the details provided, which include their address, mobile number, and workplace. CPV helps the lender confirm the borrower’s presence at the stated location. For example, many small-ticket personal loan apps in India use video-based CPV to verify that the applicant is at the residential address mentioned. This verification is carried out either by geo-tagging or by matching the background of the applicant’s video with the address proofs submitted.

Retail Banking Sector

Retail banks use CPV during account opening, particularly for high-value accounts or those opened remotely through online channels. One real-life use case is during the onboarding of priority banking customers. Even after e-KYC is completed digitally, banks carry out physical or tele-verification to confirm the customer’s address and employment details. This is particularly important for issuing chequebooks, debit cards, and other sensitive instruments. In some cases, banks assign CPV agents to visit the customer’s residence to ensure the provided details are accurate. In urban locations, banks often rely on mobile-based CPV systems where delivery personnel or field agents collect live photographs and location coordinates while delivering account kits.

SME Credit Underwriting Services

When it comes to lending to Small and Medium Enterprises (SMEs), banks and Non-Banking Financial Companies (NBFCs) often struggle with the limited availability of financial documents. CPV fills this gap by offering real-world evidence of the business’s existence, operational capacity, and location credibility. One widely used approach is the physical verification of the business premises. For example, before offering a working capital loan, the CPV agent visits the SME unit to verify whether the business is operating at the stated location and assesses the number of employees, the type of machinery installed, and other operational indicators. They also verify that the board, shop license, or GST certificate matches the business’s name and address.

Collection and Recovery Operations

In loan recovery, CPV is used to trace borrowers who are not responding to digital or telephonic communication. This helps verify whether the defaulter still resides at the last known address or has moved to a different location. For instance, in the collections process of unsecured loans, when a borrower becomes uncontactable, the lender deploys field staff for address verification. The field executive visits the residence or business address and gathers intelligence from neighbours or local vendors to confirm the borrower’s presence. If the borrower has shifted, these field visits help locate the new address through informal sources.

Rental Agreement

When it comes to renting out a property, a background verification service by local authorities or agencies assigned by landlords becomes crucial. A field officer visits the address to verify if the tenant genuinely resides at the location and has shared accurate details in the rental form. This also involves verifying identity documents, checking with neighbours, and sometimes capturing photographs. The police verification process relies heavily on the CPV to ensure that the person has no criminal background and that the provided residence data is valid.

Insurance Claims

If the insurer suspects inconsistencies in the claim, they initiate a CPV to physically verify the customer’s residence or the location of the insured property. For example, in health insurance, if a person claims hospitalisation in a city far from their declared residence, a CPV may be done to understand the reason for travel. In property insurance, the insured premises are checked for pre-existing damage.

Conclusion

Contact Point Verification is a crucial process in ensuring the financial system remains secure and trustworthy. It plays a vital role in preventing fraud, mitigating credit risk, and ensuring compliance with regulatory requirements. Despite the rise of digital verification methods, CPV remains a necessary step in building a reliable customer profile, especially in high-risk or high-value transactions.