While a blockchain-based utility can help banks reduce the burden of time and cost associated with gathering customer information, we believe it is critical banks still perform due diligence on customer information obtained from the platform. Care and attention must be given to issues such as privacy regulations and customer permissions.
Know Your Customer (KYC) processes provide the backbone of financial institutions' anti-money laundering efforts and help to detect and prevent criminal behaviors the world over. Despite the importance, KYC at many financial institutions is inefficient with tedious processes, duplication of effort and risk of error, which is costly and could negatively impact customer experience.
With the convergence of operational, regulatory, cost and customer experience challenges, it is clear that a change in KYC is needed. Technology may be the answer - but is blockchain the right solution?
Benefits of a blockchain KYC utility
The immutability and transparency of blockchain provides a streamlined way for financial institutions to gain swift and secure access to clean and up-to-date customer data. This results in greater operational efficiency, increased trust between institutions and reduction of labor-intensive data gathering, processing time and costs.For regulators, the use of blockchain provides a single source of customer data for better understanding and visibility of customer activity across financial intitutions. From a customer standpoint, an institutions use of a blockchain-enabled KYC utility could reduce onboarding wait times and eliminate the need to repeatedly provide the same information to their financial services providers.