Proof of concept “blockchain for KYC” completed in Singapore
(4 October 2017 – Asia) Three major lenders have joined together in Singapore to develop a “know your customer” (KYC) identification and verification system using blockchain technology.
Oversea-Chinese Banking Corp. (OCBC), HSBC and Mitsubishi UFJ Financial Group (MUFG), together with Singapore's Infocomm Media Development Authority, successfully tested a "proof of concept" prototype, which shows an idea is feasible, between February and May 2017.
In a joint announcement, the four parties added that they are the first consortium in Southeast Asia to complete such a test.
OCBC said the firms would explore the possibility of testing the system on a larger scale with other partners.
As part of the onboarding and new account opening process, individuals and companies are required to submit a set of documents whenever they start a new relationship with a bank as part of regulatory requirements, with verification taking days or weeks.
A distributed ledger technology platform allows for the information to be collected and verified just once if customers consent to the sharing of data.
OCBC, HSBC and MUFJ said their tests showed the prototype system remained stable even with a high volume of information flow. The system was also resistant to tampering by third parties, while confidentiality was maintained as access to the ledger required authentication.
"The MAS has spoken about the importance for Singapore to work smarter in how it fights financial crime...The launch of this KYC platform is an accumulation of all of these aims: collaboration, innovation and crime prevention," said Beaver Chua, head of financial crime compliance at HSBC Singapore.
The city-state has been encouraging banks and financial technology companies to use it as a base to develop and test new systems. In August 2015, the Monetary Authority of Singapore set up a special group whose functions included developing strategies to facilitate the use of technology and innovation in the financial sector.
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