KYC: Blockchain will change how businesses think about identity
Introduction Identity in the developed financial services world is defined by government-issued identity (drivers’ license, passport, social security card, etc.) and the controlled acceptance of those individuals / entities (by CRM, KYC utilities, etc.) at an organizational level.
How banks think about identity today Managing identities is a nightmare for banks that are increasingly conscious of their operational burden on margins and the risk of falling afoul of regulators. KYC is noncompetitive, manual document intensive and highly duplicative particularly for multi-national corporations with multiple banking relations per country.
The idea of self-sovereign identity Today, we keep passports, birth certificates, and utility bills at home under our own control, maybe in an “important drawer,� and we share them when needed. When we want to prove our address, we must over-share many other identity details in that one form of identity evidence.
What’s the answer? Blockchain. Blockchain is a type of distributed ledger where all data is replicated for all participants in real-time. To use Blockchain as a foundational architecture for identity applications would allow governments or banks to provide people with digitally-stored identity via an app.
How that impacts financial services – KYC Banks and financial institutions are required, by law, to clearly identify and create a risk profile for each customer. The KYC utilities Blockchain model of the future will focus on multiplying cost savings across the industry, which will in turn present the leading KYC utility with selfperpetuating market leadership.
Distributed client data collection With a blockchain-based KYC utility model, banks will regain ownership of the end-to-end client interaction. Instead of the KYC utilities asking new corporates to consent to sharing their client data, member banks would ask their existing corporate clients for consent to share onto the utility.
Centralisation of risk and controls Banks and regulators can achieve tighter control and reduced regulatory risk by limiting human input and driving standardisation across the industry. Direct feeds from authoritative sources into the corporate profiles will better reduce fraud risk and the scope for human errors, compared to physical documents or customer-entered data fields.
About Signzy Signzy helps financial institutions transform current semimanual processes into real-time digital systems, using Artificial Intelligence and Blockchain. This ensures that the new processes are user-friendly, yet secure and compliant. Bangalore office BPL building, 11th KM, Arakere Bannerghatta Rd, Bengaluru, Karnataka – 560076
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