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Abu Dhabi Global Market (ADGM), an international financial free zone within the United Arab Emirates, claims to have successfully completed the testing of a blockchain know-your-customer (KYC) application.
The ADGM announced on Tuesday that the first phase of the project was concluded in association with its regulatory body, the Financial Services Regulatory Authority (FSRA) and the KPMG project advisor.
The KYC app provides financial institutions with a unique location where customer identification and verification can be performed once for a client, rather than repeatedly by different entities for the same customer, he explained ADGM. The main features of the app, he adds, are an unalterable check-out track, secure data sharing, compliance with the GDPR data privacy rules of the EU, interoperability with third-party systems and customer consent.
The study found that the KYC process, which is currently "cumbersome, repetitive and expensive," can be "radically simplified" using distributed blockchain technology. The institutions were able to "share" successfully and validate KYC documentation and updates of their customers' data on the prototype in a "safe" environment, said ADGM.
Protect the screens of KYC apps (image via ADGM / KPMG)
"By leveraging the power of technologies like blockchain, the e-KYC project demonstrated tangible benefits that could be offered by an e-KYC utility for financial institutions in the UAE," said Richard Teng, CEO of the FSRA division of ADGM.
He added:
"In addition to improving KYC controls across the industry, the utility can achieve significant cost savings and financial inclusion driven by unified KYC standards."
The project was launched for the first time in February this year for a consortium of major financial institutions based in the UAE, including Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, First Abu Dhabi Bank and more.
FSRA is planning a second phase of the KYC project in an attempt to facilitate access to banking services for small and medium-sized businesses.
Other major financial institutions around the world are also trying to build blockchain-based KYC systems. In June, a group of 39 banks and regulators, including BNP Paribas and Deutsche Bank, conducted a trial of a KYC compliance application based on the RCA blockchain platform.
Image of Abu Dhabi via Shutterstock
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