To prevent fraud and money-laundering, banks and financial institutions have to know who they’re dealing with.
The diligence they take in verifying client identities is necessary for what’s known as ‘know your customer’ (KYC) compliance. It can also be costly and resource-intensive and even more so if compliance isn’t met.
Estimates vary but it is widely reported that KYC compliance costs and complexity are increasing. These costs can include the investment in resources to meet compliance as well as fines for non-compliance, but there’s also the cost of losing clients due to the complexity KYC checks add to the onboarding process.
“Significant cost savings can be achieved by taking steps to digitise the collection and handling of customer KYC data, and even more benefits are possible if this is done by creating an ecosystem whereby financial institutions collaborate around sharing of data, contributing to enhanced data quality and coherence across a market,” said Astyanax Kanakakis, CEO and co-founder of Norbloc.
Norbloc has developed this solution using blockchain technology.
Founded in 2016, Norbloc claims to be the only company with a distributed KYC network in operation at scale. This live example of KYC on the blockchain was launched in the United Arab Emirates in July 2020. It involves nine institutions currently holding more than 300,000 customer KYC files on the network.
Norbloc is also involved in a similar shared KYC proof of concept with the Central Bank of Sri Lanka. While Norbloc could be a revolutionary cost-saving solution for financial institutions, this is not an industry that easily moves with new trends.
Convincing the financial sector to adopt new technology takes time and, Kanakakis added, is easiest when you have working model for reference.
Norbloc is an international operation with a development hub in Athens and its commercial office in Dubai. The ultimate goal for the company is to become the backbone of regulated data networks for financial institutions and governments globally.
Across its three platforms – Sancus, Atlas and Fides – Norbloc targets the most pressing problems when it comes to regulated data: the lack of digitisation and the duplication of efforts. These three platforms assist in the collection, validation and secure sharing of sensitive data between institutions. The company also promises compliance with data regulations such as GDPR.
Using this technology, institutions can combine their KYC efforts and streamline their onboarding process for customers. This can also be useful for government entities involved in the KYC process, such as corporate registries and tax authorities.
“In terms of savings, these reach 30 to 40pc of the current cost base of institutions, not including the potential our platforms give to participants to monetise on their data validation efforts, further enhancing the positive monetary impact,” said Kanakakis.
Underpinning Norbloc’s platforms is considerable proprietary IP that has been tested by more than 10 large financial institutions. The company may start seeking external investment later in the year but, for now, top of the agenda for 2021 is expansion in Europe.
Source Siliconrepublic