In a joint release on Tuesday, OCBC Bank, HSBC, Mitsubishi UFJ Financial Group (MUFG) and the Infocomm Media Development Authority (IMDA) have developed and tested a KYC blockchain – a first in South-east Asia.
The prototype is said to be able to solve current practice of collecting and verifying personal information from customers repeatedly. Singapore laws on prevention of money laundering and countering the financing of terrorism has required financial institutions to obtain and verify customers identification – a process that can take weeks as resources are spent validating physical documents.
Managing Director of the Monetary Authority of Singapore (MAS), Ravi Menon, has said in a speech that knowing the identity of a customer is one of the biggest pain points in the financial industry. Ravi Menon went on:
The process is costly and laborious, and hugely duplicative. The pain is pervasive because KYC and identity authentication are involved in so many financial services, from opening a bank account to making a payment to making an insurance claim.
According to the article reported by The Business Times, the KYC blockchain prototype operates on a distributed ledger technology and enables structured information to be recorded, accessed and shared across a distributed network using advanced cryptography. With the customer’s consent, information can be shared accurately and efficiently.
The prototype reportedly remained stable even with a high volume of information, was resistance to tampering and maintain data confidentiality.
Singapore’s National KYC Utility
Back in May 2017, the Ministry of Finance and Government Technology Agency (GovTech) launched a national KYC utility, MyInfo, a similar consent-based identity profile platform for Singaporeans and Permanent Residents. Verification is done by seven public agencies, including details such as income and employment information.
Smart Nation Initiative
Singapore strives to become a Smart Nation to benefit from advances in digital technology to solve problems and existential challenges.
IMDA’s Chief executive, Tan Kiat How, said:
This willingness to experiment is crucial in achieving our vision of a dynamic Digital Economy for a Smart Nation. We are heartened that financial institutions are developing innovative fintech solutions to improve productivity and deliver a better experience to their customers.