In total, 10 global banks – including Nordea, Société Général and US Bank – joined forces at R3’s research centre on the three-month project, using distributed ledger technology to place control of an identity with its owner.
The PoC was designed to show how distributed ledger technology can help banks fulfill basic KYC requirements of new customer onboarding while providing increased transparency, security and cost-efficiencies. In addition, it provided bank clients with a single interface for managing their global identity, which in turn simplifies and streamlines the onboarding process.
KYC is an intrinsic part of banking, helping to fight fraud and money laundering. But it is also expensive – costing some firms up to $500 million a year, according to Thomson Reuters – because of inconsistent standards, long turnaround times and duplicative processes.
This, R3 hopes, makes the process ripe for disruption. The consortium argues that the successful creation of a shared KYC service on its Corda platform would allow participants to create and manage their own identities including relevant documentation. They can then permission other participants to access this identity for client onboarding and KYC purposes. For additional validation, they can request authoritative participants for attestations against the identity.
Furthermore, the firm says that Corda’s unique approach to sharing data, whereby only those with a need to see it will have access, addresses any concerns around data privacy and security that may arise when sharing identity details.
David Rutter, CEO of R3, comments: “The growing complexity and cost of KYC compliance requirements presents a major challenge for banks on-boarding 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.”