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Five French banks and 21 companies, together with the blockchain R3 company, completed a fourth trial of the CordaKYC blockchain application to share customer data (KYC). But R3 now reveals that it does not intend to bring the solution to the market.
CordaKYC is a prototype designed and developed by the company and by the Synechron consulting company on the Rope blockchain platform of R3. It works like a "self-sovereign" model, where business customers can create and control their identities, including relevant documentation. Banks can request access to data, while customers can approve requests and revoke access. Any updates made automatically become visible to banks that have permission to access the data.
The new test is the fourth of a series of tests that have been conducted for the solution. The former were known as Leia 1 and 2, and more recently as "CordaKYC".
A total of 26 companies participated this time in what was a regional test, in which KYC requests were simulated in the group. Participants include AFTE, Allianz France Insurance Company, Alten, BNP Paribas, bioMérieux, Crédit Agricole CIB, Daher, Danone, Engie, Natixis, Natixis Assurances, Natixis Investment Managers, Ostrum AM, Pierre et Vacances, RCI Bank and Services and Société General.
The process saw 232 updates sent to the banks through Corda, with data sharing approved 185 times between companies and banks, according to Estelle Roiena, senior associate of R3 and responsible for business development for France.
Tells Roiena GTR that the goal of this particular test was to ensure that the companies' experience of meeting the KYC requirements through Corda were effective and in line with their needs.
"While previous trials have focused on KYC from a banking perspective, with this trial we have focused on how the service will work for companies," he says. "The process involved companies from a wide range of industries, including department stores, pharmaceuticals, finance and even aerospace, which enables us to demonstrate to companies like KYC on Corda that it can be responsive to the challenges of any industry and helps companies to feel confident in the process to ensure that the solution is adapted to the needs of all companies ".
He adds that France was an "ideal country" for such a regional process, given that blockchain activity in France is "accelerating".
While R3 describes the process as a "big step forward in making blockchain-based KYC a common reality for corporate banking," he states that the CordaKYC application is "not a product in its own right" and the goal is not is to take the solution for the market.
Instead, the goal is to "demonstrate the benefits" of managing KYC through the blockchain for both companies and banks, explains Abbas Ali, Director of Solutions for R3 Partners.
"Our plan has always been to develop the" operating system "on which other companies will build applications to address business challenges," he says. "By helping the community better understand how KYC applications work on Corda, we can support a broader ecosystem and share our learning with partners who develop applications for end users."
The case of perfect use of Blockchain?
A number of KYC applications are already live on Corda, including Tradle and Gemalto's Trust ID network, with other companies, such as Norbloc, currently implementing similar solutions on the platform.
What they all have in common is that they see the blockchain as a way to make KYC – a task that is bogged down by manual processes that require a lot of time and effort and duplication of effort – more efficient. The figures speak for themselves: some major financial institutions spend up to $ 500 million a year on KYC and customer due diligence, according to Thomson Reuters. And the amount of time dedicated to KYC's efforts is growing: the Thomson Reuters 2017 survey found that the average company spends 26 days a year providing information on KYC regulation, compared to 23 days in 2016.
Unlike the centralized solutions currently on the market, such as the KYSS registry of Swift and KYC.com by IHS Markit, blockchain technology eliminates third-party data aggregators and centralized data stores. Instead, it uses the power of the distributed and immutable ledger to promote greater operational efficiency through a digital process flow and a simplified way to access customer data updated in real time.
Founded in 2014 in New York, Tradle's solution addresses a wide range of industries, including commercial finance. Talking about GTR for his recent Fintech Issue, Gene Vayngrib, CEO and co-founder of Tradle, said he was convinced that a decentralized model could make the commercial finance sector more agile and significantly speeds up the time it takes to make a deal.
The main objective, he added, is to help banks transform the pain of compliance into a commercial advantage for banks, which can therefore better serve their clients.
"Most of the conversation in commercial finance is that KYC is such a pain and it's stopping business," he explained. "The way we approach is: it's a commercial advantage." The information is sitting in a silo and we are removing it from the silo and making it available for commercial business. "Now two companies that are KYC & D from banks they can engage in commerce much faster. "
Meanwhile, the idea of a blockchain-based KYC solution has met a cautious interest from established players. For example, Bart Claeys, the manager of the Swift KYC registry, has recently stated GTR that KYC "looks like the perfect case for distributed ledger technology"But he argued that it still does not solve the real problems faced by banks today." Swift himself has helped banks deal with the burden of KYC since it launched its KYC register in 2015. Of the 11,000 Swift members, 7,000 have correspondent banking activities and are therefore the focus of the register, with approximately 5,000 adhering to the centralized, non-blockchain-based solution so far.
The challenge, said Claeys, is that blockchain initiatives have so far been driven primarily by technology rather than compliance. "For us, at this stage, I have not yet seen the added value of initiatives related to distributed register technology compared to what we have in our centralized solution," he says, raising a skepticism widely expressed in the industry: technology can you just get the banks on board and let them want to work together to improve KYC?
"In my opinion, many of these initiatives have been initiated from a technological perspective, but today little has been said about the level of acceptance from a perspective of compliance with the banks – ultimately, whether it is a 39. Centralized utility based on general or centralized accounting technology, support and support from the internal compliance side of each bank will be required, "he said.
