What Is The Blockchain KYC Solutions?

Banking and financial systems are an important pillar in a nation’s economy. Their functioning needs to be seamless and transparent. However, the current banking system lacks this factor. Though there is a wave of change that is impacting this sector, we still have to buckle up to face the challenges of the future. Has it ever bothered you, what if the personal information and bank details get leaked, why it takes so much time for verification and validation? Well, these are some common hindrances in the way of an effective banking system. Besides, banks also face a lot of hassles while completing the KYC.

Whooping numbers:

As per the reports of Thomson Reuters, some of the major banking and financial institutions are spending around $500 million for KYC. The average spending on KYC by some of the major financial institutions is $48 million.

When we talk about KYC, then it’s important to mention that KYC is a prolonged procedure. This consumes not only time but also a lot of money. Moreover, there is no guarantee of the authenticity of the information, but with the help of Blockchain technology, we can easily overcome all these problems. Blockchain offers features like data security, provenance, authenticity and transparency. All these factors make Blockchain overcome the problem in the conventional banking and financial system.

How will Blockchain help?

With the help of a decentralized system like Blockchain, you can easily accumulate data from different authoritative service providers into a single immutable and cryptographically secured database. With the help of Blockchain, we can have a DLT that is shared to all the users on the network. With decentralization, there is no single ruling authority, thus making the system less vulnerable. All these features make Blockchain a trustworthy platform to store ID details.

This feature of Blockchain technology can become useful for the financial service sector. One of the uses of Blockchain for the financial sector is in KYC verification. It will aid faster and easier KYC verification. Since Blockchain offers reliability, financial institutions can Due to the reliability of Blockchain databases, government institutions and companies can use this technology for KYC verification.

Use of Blockchain for KYC:

Companies like IBM are using Blockchain-based KYC platform. The basic architecture of this platform is where a bank sends a request to the Blockchain platform to access your identity information. The user has to log in the platform via OTP and allocates a private key to the bank. Though a third party can access the data, the consent for the same is given by the user.

1. Distributed user data collection- Unlike the conventional system, the new Blockchain-based platform will allow the third parties to access the information easily, but only after the permission for the same is acquired.
2. Transparency- Blockchain-based KYC platforms will help in monitoring every information right from the opening of an account to everyday transactions. When this is merged with smart contracts that have pre-programmed parameters to find out faulty activity etc. This new platform will alert the banks and financial institutions about the malicious activities. With the immutability feature, you are assured of having a system where data is safe and cannot be altered.

The future:

These were just one of the ways in which Blockchain can enhance the KYC system and at the same time makes it trustworthy and free from hacking. Moreover, there is a guarantee of the authenticity of the information. All this happens with the successful implementation of Blockchain technology with the current banking system. Here comes the role of Blockchain expert.

At Blockchain Council, you will not only get information about Blockchain but also about the implementation of this technology in different fields. With this certification program which is specially designed for the financial system, you can easily pick up how to use Blockchain technology for KYC and other aspects of banking.

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