Blockchain ‘Collaborative Authentication’ Sets New Trend in Banking Security
ICOBox co-founder Daria Generalova on how Capital One’s move is timely for banks looking to boost both security and user experience
Banks could be forgiven for feeling like they are somewhat “stuck between a rock and a hard place.” On the one hand, banks in the US lost $2.2bn in fraud in 2016 alone, demonstrating the need for improved cybersecurity. On the other hand, customers accustomed to slick online experiences from Google and Facebook don’t like being constantly bothered for passwords, PINs and other security factors.
It now seems that blockchain can propose a solution to this problem. American banking giant Capital One has filed a patent application for blockchain technology in user authentication designed to receive, store, record, and retrieve user information in multiple blockchain member platforms.
The aim of recording users’ personal data on a blockchain is to “enable members of the authentication system to retrieve user identification data from a database using the authentication information,” for example, for KYC requirements.
Capital One rightly notes that users may resent having to respond to repeated authentication requests as they navigate between different institutions’ computer systems. Banks will benefit from collaborative blockchain authentication that works across multiple platforms and is easier to use than existing online banking solutions.
This isn’t Capital One’s first blockchain innovation. The banking giant previously partnered with Californian blockchain company Gem on applying blockchain to the healthcare industry. As Capital One then commented, the enduring appeal of blockchain is that it “allows global standards that do not compromise privacy and security.”