Blockchain technologies for KYC may strengthen security and reduce administrative costs.
A burden for financial institutions and their customers
Know Your Customer (KYC) protocols are sets of rules aimed at checking the personal identity of customers for anti-money laundering purposes. The establishment of these regulations and their frequent updates have dramatically increased the bureaucratic burden on financial institutions, leading in some cases to the loss of customers.
The application of Blockchain technologies may successfully tackle this issue.
Digital Signatures
There are synergies with digital signatures: they may be the key to access the copy of KYC documents of a customer stored in a public Blockchain. Consequently, institutions may be allowed to access the Blockchain whenever they need to verify an identity. As well as that, customers may later modify their personal information with their digital signature, thus avoiding to inform their financial institution, which will not miss any modifications. The standardization of this process across intermediaries will further enhance efficiency.
Conclusions
Blockchain for KYC protocols represents an opportunity for both financial institutions and customers. If implemented, the aforementioned procedures will guarantee more transparency and a lower bureaucratic burden.
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