OCBC Bank, HSBC, and the Mitsubishi UFJ Financial Group, along with the Infocomm Media Development Authority of Singapore (IMDA), have successfully completed a proof-of-concept for a Know Your Customer (KYC) blockchain, Open Gov Asia reported.

Existing KYC process is largely manual and paper-based and is inefficient for both the bank and the customer. By using blockchain technology, banks would be able to collect, validate, and share customer information (with the customer’s consent) in an accurate, efficient, and secure manner.

Based on a distributed ledger technology (DLT) platform, the KYC blockchain enables structured information to be recorded, accessed, and shared across a distributed network. This, in turn, enhances the efficiency of the process by reducing the duplication of information as well as manual checks for both banks and customers. In addition, it also improves the quality of the stored customer information.

The prototype was tested between February and May 2017. According to the results, the platform showed:

• Stability even with a high volume of information flow
• Resistance to tampering by third parties
• Confidentiality via permissioned access to the ledger.

The validation of customers’ information on the shared ledger could be done by referring to government records. Banks could further streamline auditing and regulatory reporting by storing secured digital records of the validation process on the shared KYC platform.

"This partnership fans the spirit of cooperation among competitors as well as regulatory and government bodies, and we hope this will help foster and inspire more of such collaborative innovation initiatives. Our pioneering efforts have resulted in a KYC process that will not only enhance customer convenience, but will improve the industry’s operating efficiencies while reducing financial fraud and crime," said Mr. Pranav Seth, Head of E-Business, Business Transformation and FinTech and Innovation Group, OCBC Bank.

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