The Identity & KYC conference in London hosted a workshop on utilizing blockchain innovation to enhance know-your-customer procedures previously today.
Led by blockchain compliance specialist Si n Jones, the workshop was participated in by a group drawn from banks, financial institutions, startups and regulators.
The group went over a number of challenges faced by banks and banks when it pertains to identity, and whether the blockchain can help solve these problems. The frustrating consensus was that although the blockchain is extremely promising, it has numerous real-world constraints around identity
The conversation was exploratory in nature, concentrating on the requirements of current financial industry individuals and exploring the use of potential blockchain innovations.
KYC moving beyond simple identity.
The group discussed the influence on the monetary market of the pattern of moving away from just taking a look at government-issued identity cards, like passports and motorist's licenses. Participants took a look at exploring more holistic datasets around individual identity that involve everything from purchase history to energies connections to examine an individual s identity.
These third-party data points currently provide a vital source of recognition information beyond easy identification systems and are ending up being progressively popular in the financial market and elsewhere to supplement government-provided identification information. They are also more nebulous in nature, providing a 'likelihood rating' for how highly the algorithm believes the person is who she states she is.
The trend is anticipated to accelerate in the future, with simple recognition mechanisms ending up being less important for financial institutions.
In such a world, an identity on the blockchain, like a tokenized variation of a driver s permit, might not suffice for the majority of businesses and financial institutions. Any blockchain solution will therefore need to gather information on the individual readily available through third-parties, a considerably harder issue for blockchains to resolve.
Where blockchains fail
There are numerous difficulties dealt with by the monetary market including identity, and a few of the essential problems are tough issues to fix. The preliminary on-boarding procedure, when the issuing of identity is very first performed by a government or monetary body after validating details about the individual, still continues to be a difficulty.
This is specifically true on an international level, where a considerable part of the developing world is without any type of government-issued recognition.
The reliability of any identity, whether on the blockchain or outside, is just as great as the authority releasing that identity an identity verified and issued by the UK federal government, for example, would likely be thought about more trustworthy than one released by a bank in Somalia.
Advantages of blockchain-based identity
There are several advantages of utilizing blockchain-based identity, specifically around the quick dissemination of details about an individual in a global context.
This is true when identity needs to be revoked and reissued, specifically in case someone's identity is stolen. For instance, if a passport gets taken, the releasing nation may change it, but it takes a lot longer for a banks in another nation to find out about the status of this identity revocation. Blockchain enables this process to be fast and efficient.
In addition, blockchain-based identity systems have the possibility of selectively revealing info about an individual s identity. This might help prevent identity theft and improve end-user privacy.
There might also be effectiveness gains by bigger institutions around issuing blockchain identities, specifically because a lot of confirmation processes today are recurring.
Although not a present concern to the nascent Internet of Things market, several institutions are looking into how digital identity will play out when identity is not restricted to individuals and lawfully specified entities however also includes physical things.
A blockchain looks like an efficient option to handle such massive identities that need to be shared amongst multiple stakeholders.
Although lots of banks are checking out blockchain technology for identity solutions, most of the rules and policies around KYC and identity for controlled monetary business revolve around government-issued identity as the preliminary requirement. For that reason, making use of blockchain for identity will have to begin with a government body deciding that it would provide some type of identity on the blockchain.
There are many unsolved issues around this, from personal privacy to access. For example, even though an identity document like a passport is provided to the individual, it isn’t owned by the person in a legal sense.
It is unclear how the identity data on a blockchain will be owned whether the individual or the identity releasing body will ultimately own the identity and information around it.