The Infocomm Media Development Authority (IMDA) of Singapore, along with financial giants OCBC Bank, HSBC, and Mitsubishi UFJ Financial Group (MUFG), built the first consortium in Southeast Asia with the aim to establish a Know Your Customer (KYC) blockchain prototype.
According to their joint press release, they have completed a way for financial institutions to properly identify and verify clients' credentials in cases like opening an account or when applying for an insurance policy of credit facility using the blockchain technology.
Prior to this technology, banks conduct their KYC process separately, requiring customers to supply the same information to different institutions. This process could take weeks and would require resources to properly determine the customer's identity.
This hassle would be eradicated with the use of a distributed ledger technology (DLT) platform, which the KYC will operate on.
Business Times reported that this permits structured information to be recorded and accessed across a distributed network through advanced cryptography.
The consent of the customers will allow banks to collect, validate, and share customer information conveniently and efficiently in a more secure manner.
IMDA and the financial giants tested the prototype between February and May 2017. It is worth noting that the prototype remained stable even when fed with a high volume of data and information.
IMDA Chief Tan Kiat How said this marks a milestone in the journey of the country to becoming 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," he said.
OCBC Bank Head of E-Business Pranav Seth was quoted saying in Finextra, "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," Pranav Seth, OCBC Bank Head of E-Business was quoted saying in Finextra.