The Onboarding Customers KYC Improvising With Blockchain

The Onboarding Customers KYC Improvising With Blockchain

E-wallet App Development: Cost, Features, Technology Stack and More. Digital or cashless payment methods are the new trends in the market. People are going cashless and they are loving and enjoying this concept of online payment.

There are so many industries in the technology world, who have been grasping the blockchain technology rapidly. It shows an increasing growth in the Blockchain Industry that has been erecting and has begun to grasp various industries. There are very early adopters of blockchain technology which are like; Trade, education, trade, rental real estate and the entertainment industry.

** What is Blockchain?** The blockchain is a system recording way that makes it difficult or impossible to change, hack or cheat the system. The Blockchain is essentially a digital ledger of transactions that is duplicated or distributed across the entire network of the computer system on the blockchain.

So, the main question is What is KYC?

A KYC which means (Know Your Customer) refers to the process of customer identification which verifies the identity of your customer in order to maintain transparency with the customers. It also references the regulated banks customer identification. It was initially introduced in the year 2000 and its very early days, it is used as a identification for their private financial customers For the financial institution like; Private & Public Banks. It's easy to keep up the KYC practices as now they could check and verify all the risk and customer identification documents before every transaction. KYC is not the same for the financial transaction through internet. Because It eventually became difficult to ensue of the document authenticity. It is very often that people sometimes give fictitious documents for verification. And the poor quality scanned pictures or blurred pictures of customers documents. Therefore, It only meant to eliminate anonymous transaction by gathering customers information.

So, that the company trusts the verified customers only. Now with the advanced technology, more people started having smart phones, laptops and tablets which is now very common with the high- speed internet connection. Back to before 2010 it was just a method of customer identification for the financial industries.

With using internet banking and payment system the customers were being approached to click a picture of their documents by their own hands and send them through email or any social networking sites, to ensure the authenticity of the authorities would ask from the customers to click the photograph from different angles if it isn't enough some customers were asked to make a video call to confirm the verification.

Reasons that Brings Blockchain into the UK's Financial Industry.

The Blockchain is very famous since the crypto of projects. Because of the crypto projects they initially implemented the blockchain system because it contains all the information they want and from the depth of it. Let's put aside the crypto currencies projects .

What other reason can arise the demand of blockchain?!

The trend of blockchain adaptation in the financial industries (sectors) has been booming because of the implementation of the Fifth Anti-Money Laundering directive (AMLD5) by the european union on 10th of january. It shows that now the regulators will need every detailed information related to the financial transaction of the customers and they also require those transaction details. The Blockchain is very popular (especially) in the G7 (Group of seven) countries apart from the UK because every company needs to verify their customers equally. According to the FATF (financial action task force on money) this has been in the rigid force with the similar line of these regulations since 21st june 2019 as the UK did it before.

All these laws have become important norms and unuttered requirements for the global financial sector. After the requirements fulfillment the main objective of these requirements is to train the fintech companies to guide their customers through AML (Anti-Money Laundering) or you can say KYC during the on-boarding customer process in the company.

How does it all work?

As you know blockchain is a wide concept and it is similar to a distributed ledger where the main data is shared in the real-time with all the participants. By this agenda it can be helpful to the financial institution to streamline their KYC process by using real-time data exchange with the customers for faster and more efficient validation to the customers.

The blockchain KYC validity process will help several financial institutions in the industry such as central banks, commercial banks, eWallets providers, insurance companies, investment firms and so on. it is compulsory to distribute all the information and in blockchain it is replicated to customers in real-time and also backed up at the very same time. It is very hard to store all the information in the single device so they divide their own information to it self.

How does the KYC validation process work with the blockchain?

The very first thing financial institutions do is requesting each customer's identity data form the blockchain platform. After getting confirmation from the Blockchain platform the financial institution will be able to login by using the OTP (One-time password) now they have all the access to their private data. They can use it as they want without thinking that data is managed by the third party every stakeholder can ask to access the data. The blockchain technology is only considered to be self-sovereign and the customer can do whatever to do with their data. Blockchain has been proving itself from the beginning.

** What are the Advantages of using Blockchain for KYC?**

Blockchain is a best source as it improves its control and reliability over confidential data. It only distributed customer data to the customers themselves which is very amusing. It reduces regulatory risk because some customers aren't active. Blockchain systems will reduce human interaction in a huge way. It can enable standardisation across the industry worldwide. Blockchain can decrease fraud and human errors.

Conclusion:

The blockchain is a huge concept it is formed for the fulfilment of the verification process in the Worldwide. This technology is great as it is capable of transforming the way the financial industry handles the KYC process for online transactions. This system can make customer verification and authorization the way possible efficiently in the finance industry. Not only MNC's or fintech industry but the other industry can rely on it. Customer identification is the most demanded thing now and every industry want this type of trustworthy technology in future.

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