How Blockchain Is Helping Financial Institutions Offer Product And Service Transparency
PSFK researchers examined how companies are using blockchain technology to streamline transactions and provide better product and service transparency
Blockchain: At this point most have heard of it, yet still many don’t understand what it means or how exactly it works. What is becoming clear is that, in the next decade, blockchain technology will have a profound effect on how many systems function, especially banking and finance. PSFK researchers delved into several ways that companies are using blockchain to verify customers’ identities, streamline transactions, ensure contract security, provide product and service transparency, and ensure fair payment to everyone involved in the supply chain.
Financial institutions often struggle with balancing a need for innovation with the difficulty of updating systems still in daily use that are rooted in decades of process. According to “The Quiet Revolution In Financial Services” from Capgemini Consulting, “Many banks see the benefit and possibility in Fintech but find innovation a challenge—less than 3% have managed to embed innovation in their culture—increasingly collaborative spaces are being used which encourage design thinking, in which mixed functional groups from within organizations can experiment, test and learn, disrupt and unlock creativity, innovative thinking and a new culture.”
As part of a larger trend we are calling “Know Your Customer,” PSFK researchers examined how financial institutions are deriving blockchain ledgers from their customers’ personal information to instantly verify customer identities and enable remote, anywhere onboarding—promising customers a frictionless sign-up process. Here are a few of the most interesting ways this advancement is being implemented:
Chinese insurance company Ping An’s “Smart Verification” uses AI technologies such as face recognition and voiceprint recognition to create a biological record of each customer, which performs a speedy verification with the physical person, his/her behaviors and attributes. This technology enables the insurance industry to shift to a physical person verification system, thus solving a number of traditional problems concerning safety and convenience.
Singapore and Estonia-based company Change uses a multi-tiered standardized KYC (Know-Your-Customer) utility, in which users won’t need to present extensive information to simply sign up for the app and get a crypto payment card. Change has built a cryptocurrency marketplace offering seamless access to numerous financial services within a single platform, as well as a spending card.
Singapore startup KYCK! is a first level KYC platform with remote onboarding capabilities that raises the quality of first level KYC, at a higher level of convenience. KYCK!’s engine scans and verifies documents against tempered or fraudulent documents on a private, permissioned high security network. Then, using IBM’s technology, KYCK! creates robust identity blocks by validation from relevant authorities participating in the network.
Accenture x Microsoft
Accenture and Microsoft are teaming up to build a digital ID network using blockchain technology, as part of a United Nations-supported project to provide legal identification to 1.1 billion people worldwide with no official documents. The new platform will connect existing record-keeping systems of commercial and public entities through blockchain, allowing users to access to their personal information wherever they are. The project aims to help individuals such as refugees prove who they are in order to gain access to basic services such as education and healthcare.
As established financial institutions embrace blockchain technologies, many of the legacy processes that weigh down daily financial transactions will be updated or replaced. From a consumer perspective, this means less friction in everyday transactions, as well as a more personalized and transparent experience overall. For more on this topic, check out our recent research paper Leveraging Blockchain In Financial Markets.
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