e-KYC platform
launched for banks employing blockchain technology
The Pakistan Banks Association (PBA) has introduced a novel
initiative, termed "Shared Electronic Know Your Customer (e-KYC)
Platform," in collaboration with the State Bank of Pakistan (SBP). The
platform, employing blockchain technology, facilitates the sharing of customer
data among banks, aiming to enhance the onboarding experience for new customers
and reduce operational costs.
As of December 18, the SBP has issued a circular officially
announcing the launch of the Shared e-KYC Platform. The central directive
encourages all banks to participate in this collaborative effort, urging them
to allocate dedicated resources for its seamless implementation.
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Traditionally, banks undergo a two-stage Know Your Customer
(KYC) process, during the onboarding of new customers and periodically for existing
ones. The shared e-KYC platform, built on distributed ledger technology,
empowers individual banks to store and share KYC and customer due diligence
(CDD) information securely. Notably, access to this critical data is contingent
on explicit customer consent, ensuring protection of customers' rights.
This innovative platform offers several advantages,
including the swift exchange and updating of KYC or CDD information across the
banking sector through a secure digital channel, standardization of KYC or CDD
data, enhanced customer onboarding experience, and cost efficiencies for
participating banks. Furthermore, it is anticipated to simplify the
customer-switching process.
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The circular emphasizes that the SBP has fortified
Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)
measures over the years, including KYC and CDD processes. To optimize these
processes further, banks are now permitted to rely on third-party institutions
for efficient KYC or CDD.
Raza Matin, CEO and co-founder of Brandverse, lauded the
initiative, recognizing it as a significant driver of financial services
quality in Pakistan, especially following the introduction of RAAST. He highlighted
that shared KYC facilitates faster account opening and improved service
quality, promoting real money mobility.
Previously, the PBA, representing its member banks, entered
into a contract with the Avanza Group for the development of Pakistan's first
blockchain-based national e-KYC banking platform. This project aligns with the
SBP's ongoing efforts to strengthen AML and CFT controls. The platform, named
'Consonance,' utilizes blockchain to standardize and exchange information
across a decentralized network, with customer consent.
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Shared e-KYC platforms have been successfully implemented in
other countries, including India's Central KYC (C-KYC) registry. This global
trend underscores the evolving landscape toward digital open banking
ecosystems, emphasizing collaborative efforts and shared data for improved
customer experiences and streamlined financial processes.
Source: Profit Pakistan