Led by R3, the trial was an exploration of how blockchain can advance KYC processes for banks, corporates, regulators and data services.
Blockchain pioneer R3 recently announced that it conducted a four-day collaborative trial in May involving 39 financial services firms that tested more than 300 transactions via a know your customer (KYC) application that uses the R3 Corda blockchain platform.
The trial was an exploration of how blockchain/distributed ledger technology (DLT) can advance KYC processes for banks, corporates, regulators and data services, officials say. The transactions that were part of the trial conducted in 19 countries and across eight time zones.
The trial took place on May 23 to May 25, and then on May 28 to May 30, Jane Kenyon, project lead at R3 tells FTF News.
The firms that were involved included ABN Amro, ALD Automotive, Alfa bank, Bank ABC, Bank of Cyprus, BCI, BNP Paribas, China Merchants Bank, Commercial International Bank — Egypt, CTBC Holding, Deutsche Bank, DNB, Hana Bank, ING, KB Kookmin Bank, Banca Mediolanum, Natixis, National Bank of Egypt, NH Nonghyup Bank, Qiwi, Raiffeisen Bank International, RCI Bank and Services — the financial services provider for Groupe Renault, SBI Bank LLC, Shinhan Bank, Societe General, U.S. Bank, and Woori Bank, officials say.
The trial effort also involved regulators and central banks such as Banco de la República (Central Bank of Colombia); Federal Reserve of Boston; Superintendencia Financiera de Colombia; and Superintendencia de Banca Seguros y AFP de Peru, officials add.
The trial participants managed customer KYC data created for the test by using the Corda network with the help of CorDapp, developed by IT consultancy Synechron, officials say. Participants deployed 45 nodes via Microsoft Azure, officials say.
“The KYC process involves a bank requesting access to a customer’s KYC data and optionally requesting attestation of that data from a third party,” Kenyon says. “The customer then grants or denies access and approves or doesn’t approve the attestation. The customer can also choose to later revoke the access and can provide updates to their data at any time. That update will be propagated to all banks who have access to that data.”
Kenyon says the trial was a way to test whether a Corda blockchain-based KYC solution can deliver to large corporates with banking relationships benefits such as:
- Efficiency savings by cutting the overall cost of KYC across financial services enterprises;
- Improved customer experience through a better workflow that only uploads information once and customers retain control of that information;
- And greater provenance and transparency of data because of the immutability of the ledger and the ability to add third-party provable attestations of the data.
The “native immutable, self-sovereign and distributed nature” of blockchain/distributed ledger technology (DLT) “allows it to address the KYC problem statement in ways that traditional technologies cannot,” Tim Coates, U.S. blockchain lead at Synechron, tells FTF News.
“A trustless technology enables a single version of truth propagated real-time to all without data being stored outside the firewalls of an institution with the fee-taking and trust-bearing third party KYC utilities that exist today,” Coates says. “The immutability of blockchain solves some of the data validation challenges reducing the fraud risk and duplicative work across banks. The self-sovereign permission and distribution models enable the guarantee of control of the distribution of corporate data, whilst also removing the single-point-of-failure risk for cyber-attacks.”
In addition, 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 data.
R3 and its partners will be taking what they learned from the trial and applying it to future steps, Kenyon says.
“R3 is developing the Corda platform and works with partners who are developing KYC applications to run on the Corda platform. As partners develop these applications, we will present them to our clients for purchase and deployment,” Kenyon says.
R3 officials work with more than 200 members and partners across multiple industries from both the private and public sectors.
“As financial institutions and fintechs move their blockchain projects from innovation labs to lines of business, they require a seamless integration between their preferred ledger stack and infrastructure, and a robust set of platform components and tooling to develop, manage, and optimize blockchain applications,” says Yorke Rhodes, principal, Azure blockchain engineering at Microsoft, in a prepared statement.
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