5 Reasons Why Self-Sovereign Identity Will Save Banks Money

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20|30 Group
Alex Tweeddale
22
October 2019
The way personal, profile and identity data is managed by banks is outdated. Independent banks and banking groups are both losing revenue because significant amounts of money are spent on KYC checks, onboarding and legacy data management systems. Often, innovative solutions proposed to banks do not factor in Financial Regulations which banks must adhere to.

Self Sovereign Identity (SSI) is a solution, and we’ve highlighted 5 reasons why this technology will lower costs and raise revenues for the entire banking industry.

1. Become a Custodian of Trust

A packet of data which has been cryptographically signed by a bank which has carried out KYC checks, gives that data a high trust value. The use of this data has short and long-term value:

  • Immediate: This signed ‘credential’ can then be reused in the same bank or at other banks or partners in a closed ecosystem to reduce internal friction.
  • Long-term: This data can be used in a marketplace, for example to allow an individual to book a holiday with a travel company or prove their age in a supermarket. This verified data has a market value which financial services could charge small fees for.

In short: Banks will become custodians and lenders of trust.

2. Streamline Customer Experience

Signed KYC data can be reused within the same bank to authenticate that a customer is who they claim to be. This means that customers onboarded do not need to bring physical documentation with them to, for example, take out a loan in a bank branch. Instead, a Self-Sovereign Identity can sit on a customer’s phone in a digital identity wallet or the bank’s own app and can shared at the customer’s will.

The identity can be quickly validated in the customer’s digital journey or by a staff member behind the counter so that the work can be carried out much faster. This saves time and money, whilst simultaneously streamlining the customer’s experience.

3. Frictionless Onboarding

We’re not proposing ‘KYC reliance’. Instead, what the technology can facilitate is the transfer of a KYC document alongside the sharing of signed KYC credentials.

This means that if a bank has subsidiary companies in the same Group or consortium which all want to onboard the same individual, the individual can share their data with multiple Group members, and the KYC document can be privately shared between the Group members. This sharing is done through Corda’s Vault ecosystem. This significantly improves the efficiency of onboarding a customer, as it is the customer sharing the proven KYC data.

4. Explicit Consent by Design

Corda’s privacy-by-design architecture is a crucial part of how this model benefits businesses. By decentralising personal data, individuals are able to explicitly consent to where and when their data is processed, making a clear, affirmative action. This data sovereignty is in line with the spirit of the GDPR, reducing compliance costs and enabling individuals to easily action their data subject rights, such as the right to access, right to data portability and right to be forgotten.

5. Security Maximised

Fraud and phishing are two of the most prevalent ‘tool’ cybercrimes. This is because it is very hard to trace physical identity in cyberspace. Now that a large amount of banking and spending is carried out over the internet, it is time that a trust layer was added.

Using IDWorks’ verifiable credentials ecosystem, trust is absolute because you have trust in which bank you are transacting with, and trust in which customer you are transacting with. This removes a significant amount of surface area for cyber-criminals to impersonate a bank or steal a digital identity.

To find out more about the verifiable credentials ecosystem and how we use Corda, please don't hesitate to contact us here.

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