Everybody has a good idea that 2017 was the year of the crypto revolution and technologies using blockchain was quite the talk of the town. Blockchain has seen widespread adoption with the conception of virtual currencies like Bitcoin and Ethereum, which have greatly changed the digital payment system.
Traditional banking mechanisms are quite reserved about the rapid rise of blockchain-based currencies as it directly challenges their operational survivability. Considering the sensitive nature surrounding KYC verification, security is of top concern regarding PII information of individuals. Blockchain can play a crucial part in safeguarding data by exploiting its technological edge.
Present Concerns with KYC Verification
In the present day scenario, KYC verification is playing a crucial part in ‘cleaning’ the onboarding process. Greatly minimizing the threats faced by businesses and digital companies, including all kinds of fraud. This is addressed by verifying an individual’s identity through the help of their identification documents respectively.
As much as the process of KYC has mitigated risks and benefited businesses, a potential unseen security risk has grown as a consequence. This unseen security concern is the breach or illicit access to restricted PII information of individuals faced by most if not all providers. Providers are constantly in the pressure to optimize processes that either provide back rights to the citizens or establish processes that help secure data for corporate organizations.
How Blockchain maybe an answer to security concerns
The core concept surrounding blockchain is the centrally encrypted storage of data on the distributed ledger. Where the greatest fruit to this is anonymity. KYC verification incorporating blockchain will ensure faster and more secure processes, that will, in turn, be more efficient and lead to further trust from the public. After all, the KYC industry leverages around a ‘subconsious’ inclination towards trust. This is that invisible factor that IDV companies bank on to retain and onboard new customers.
Blockchain within the KYC process will eliminate the ‘middle party’ and drastically reduce the chances of unauthorized access. Where all data will be held in a decentralized manner, and access to it can only be given once provided with the rightful permissions. Fewer communications, fewer people and obviously less problematic. Ensuring communication is conducted in only a ‘two-party’ manner. That is, one party provides the access/permission and the rightful recipient receives it. The blockchain-KYC fusion is already seeing implementation by corporate giant IBM. Will smaller companies be compelled to follow suit or possess the necessary resources to go ahead with such change, only time shall say.
There is no doubt on how KYC verification has grown by leaps and bounds. Incorporating the rapid advancements in technology where ever possible, including AI and machine learning in defense. However, sooner or later realities start settling in, regarding the need to improve. This improvement or innovation you might call it can be achieved by incorporating blockchain within the KYC process. How much? To what degree? Is yet to be understood. However, the key to future survivability and better security might just be this. How smaller players take this, would be very interesting to see.
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