OCBC Bank, HSBC and Mitsubishi UFJ Financial Group, along with the Infocomm Media Development Authority (IMDA), have become the first consortium in South-east Asia to develop a prototype for a Know Your Customer (KYC) blockchain, the parties said in a joint statement yesterday.
The KYC blockchain is the process for financial institutions to identify and verify clients' credentials, such as when opening an account, or when applying for a credit facility or insurance policy.
KYC is conducted by each bank separately, requiring customers to provide the same information to different institutions. This inefficient process can take weeks, as resources are spent validating physical documents to ascertain a customer's identity.
Operating on a distributed ledger technology platform, the KYC blockchain will enable structured information to be recorded, accessed and shared across a distributed network using advanced cryptography.
With the customer's consent, banks are then able to collect, validate and share customer information more efficiently, and in a secure manner.
To streamline auditing and regulatory reporting, banks may also store secured digital records on the shared KYC platform.
The prototype was tested between February and May; it remained stable even with a high volume of information flow, and was resistant to tampering by third parties, said the banks and the regulator.
IMDA chief executive Tan Kiat How said the authority supports the ambitious use of technologies to transform businesses and create value for citizens.
"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."
THE BUSINESS TIMES