With the advent of blockchain technology, several legacy systems have upgraded into robust, smart systems. Blockchain provides capabilities that can revolutionize the existing financial services industry. With decentralized blockchain smart contract applications, businesses can greatly improve the efficiency and security of existing financial processes and operations, which results in reducing overall prices for firms.
Traditionally, an individual’s identity is verified by government-issued documents like drivers’ licenses, social insurance cards or passports. However, establishing authentication of different identification sources bears a significant challenge for organizations. Flaws within the security of such systems give rise to cases of monetary and data fraud. Today, establishing KYC (Know Your Customer) processes inside an organization has become necessary for different reasons, which is a tedious procedure. Besides, the massive amount of work related to such procedures and scarce transparency relating to the use of customers' personal information led to inefficiencies in collating public data.
Global efforts to combat data frauds have become expensive for governments and financial corporations. Statistics show that in 2016, corporations spent more or less $ 10billion on implementing anti-money laundering (AML) compliance processes alone. Now, the financial services sector is finding solutions to the identity crisis in these processes. Given the increased adoption by key industry players, it is apparent that a viable solution has emerged in the form of the blockchain.
Blockchain can enable the accumulation of information from multiple authoritative service providers into one single, cryptographically secured information. Digital KYC verification through this kind of design has the flexibility to be quicker, safer, and efficient than the current verification procedures, and establish trust in the overall ecosystem. By introducing blockchain solutions to handle the KYC method, personal information is going to be stored on a distributed network, however, it might so accessible by other participants, intermediaries, and third parties directly only when a user has permitted them to do so. Such a KYC system also will strengthen information security by guaranteeing that access to it is simply created when confirmation or permission is received from the relevant authority, and thus, eliminating the chance of unauthorized access. The concept of blockchain-based KYC verification platforms is already being adopted by IT giants like IBM.
However, can smaller organizations use blockchain for financial solutions or will they need to operate with legacy verification procedures?
Also Read: Blockchain and KYC: The Next Disruptive Step in Decentralization
Government bodies can benefit from the adoption of the blockchain as risk officers by ensuring the security of access to information and establishing transparency between the financial markets, regulators, and end-users. It provides the chance to reduce financial and data-related fraud within the long run. Being an experienced blockchain development company, we can assist you to assess the impact of adopting blockchain solutions for digital KYC verification. Also, let us know your thoughts or suggestions on using blockchain technology to enhance KYC verification can be a revolutionary idea?