R3 and ten of its consortium banks have developed proof-of-concept for a shared know-your-customer (KYC) service using distributed ledger technology to help manage identity controls.
The service is intended to place the control of identity with its owner, and the project simulated establishing the identity of an individual and a legal entity using distributed ledger, or blockchain, technology.
Users will be able to permission other participants to access their identities for client onboarding and KYC purposes, and will be able to request authoritative participants to verify identities.
The service is also intended to address concerns around data privacy and security when sharing identity details, only allowing those that have a necessity to see data to access it.
According to R3, it demonstrated the way in which blockchain can be used to fulfil KYC requirements, while also improving transparency, security and cost efficiencies. Offering a single interface for managing global identity, it could also serve to simplify and streamline the client onboarding process.
The development follows three months of work in R3’s lab and research centre, with input from BBVA, CIBC, ING, Intesa Sanpaolo, Natixis, Nordea, Northern Trust, Société Générale, UBS and US Bank.
David Rutter, CEO of R3, commented: “The growing complexity and cost of KYC compliance requirements presents a major challenge for banks onboarding new clients and is having a negative impact on those client relationships. Distributed ledger technology can provide a unified view of clients whilst also significantly reducing costs and time spent verifying identity.”
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