Yesterday the Dubai International Financial Centre (DIFC) announced a Know your Customer (KYC) blockchain consortium, in conjunction with Mashreq Bank and KYC blockchain developer norbloc.
The intention is to launch a production-ready KYC platform in the first quarter of 2020. The aim is to enable faster customer onboarding by exchanging documents with the help of blockchain and other distributed technologies. Speed improvements will be the result of ‘mutualizing’ KYC efforts amongst banks, financial institutions and government bodies.
There will be a joint Proof of Concept (PoC) focused on validating the identities of corporates, with DIFC and Mashreq Bank as the participants. However, the plan is for the platform to be open to other institutions.
Sweden headquartered norbloc claims the platform will reduce KYC costs for banks by 50-60%. Speaking to Greek newspaper Kathimerini, norbloc CEO Astianax Kanakaki says the platform is designed to protect user data. “The owner of this digital identity can check who has access to his information and see when it has been updated,” he said. The company says the platform has been tested by BNP Paribas, ING, HSBC and KBC.
Separately, KPMG found that 80% of the KYC effort is spent on information gathering as opposed to assessing or monitoring. But the issue isn’t just about cost. Research by Signicat found that more than 50% of customers in Europe abandon new account applications during the onboarding process. If the process was faster and easier, the theory is there will be less abandonment.
Norbloc isn’t the first to explore blockchain and KYC. Last year, the Euro Banking Association published a report on the topic. Niuron, a blockchain consortium made up of nine Spanish banks, is planning a KYC platform. Last year Synechron and R3 ran a KYC test with 39 banks. A popular solution, which appears to store data centrally, is by Cambridge Blockchain, which is backed by PayPal and other high profile companies.
Mashreq Bank is involved in several blockchain initiatives in the region. It’s a participant in a new UAE trade finance platform and launched a blockchain solution for mortgage registration.