Singapore Regulator Joins Local Banks to Establish KYC Trials on Blockchain

A regulatory body in Singapore has joined forces with several local banks in establishing the groundwork for trials of a new know-your-customer system on the blockchain.

The technology, which would rely on the distributed ledger, could see banks collecting, storing and exchanging KYC data more effectively, to deliver more cost-effective compliance with regulations.

The proof-of-concept model aims to streamline banks’ handling of their know-your-customer regulations, removing the paperwork burden now associated with these processes, in favor of a more efficient, automated, immutable platform.

The Info-communications Media Development Authority joined up with banks including HSBC Singapore, Mitsubishi UFJ Financial Group and OCBC Bank to announce the new customer identification system, which has already been trialed on a prototype basis earlier this year.

In response to the development, the IMDA welcomed efforts to implement more blockchain applications, particularly in areas like KYC processes, which can often take banks several days to process using traditional systems.

The organization’s CEO, Tan Kiat How, said the IMDA was fully behind the development of new technologies in this space.

“IMDA supports the ambitious use of technologies to transform businesses and create value to citizens. This willingness to experiment is crucial in achieving our vision of a dynamic Digital Economy for a Smart Nation. Revamping the KYC process using blockchain technology is one such example. We are heartened that financial institutions are developing innovative FinTech solutions to improve productivity and deliver a better experience to their customers.”

Early reports from the proof-of-concept trial were positive, with the system remaining robust to simulated attacks, as well as exhibiting solid uptime through the duration of the testing phase.

The group is now considering longer-term trials ahead of a possible rollout, which would enable the system to be stress-tested under a greater volume of data, and over a longer duration.

As one of the early leaders in global blockchain technology, support from the authorities in Singapore will be seen as an encouraging development for other blockchain pioneers looking to launch proof-of-concept systems in the near future.

As yet, there remains no go-live date for the system, but with positive results already under their belts, the KYC platform looks set to advance further toward implementation in the months to come.