Decentralized E-KYC Blockchain Network for Central Bank

Abstract

Know Your Customer or KYC processes are the backbones of a financial institution’s anti-money laundering efforts. KYC processes are mandatory in most of Europe and India. Almost all countries have their own process for identifying and keeping a record of their citizens like the USA has Social Security Protocol. According to current estimates, the amount of KYC spending rose to up to $1.8 Billion in 2021 on a global level. Despite the importance of the process, KYC continues to operate inefficiently. KYC processes are labor-intensive and time-consuming tasks. It is estimated that 80% of KYC efforts go in gathering information and processing while only 20% of efforts are evaluating and monitoring focused. This centralization of data is causing an inefficient KYC process and creating issues like :- Misidentification of fraudulent data , Inability of tracking customers, customers entering fake data(address, age etc) , delayed processing time and very high cost of processing. Reimagining KYC Using Blockchain Technology will enable seamless and secure data exchange at a fraction of the cost. A decentralized blockchain network will Facilitate near real-time data exchange. Blockchain when used with other technologies can indicate great potential to help organizations reduce the cost and time linked with the KYC process. The introduction of blockchain in KYC brings data on a decentralized network which also has its own pros like distributed data collection ,higher operational efficiency , validation of accuracy of the information. The customer will build their profile on the DCT KYC network. There are multiple options to store the data like Centralized encrypted servers, DCT platforms like IPFS(Interplanetary File System). Customers will perform transactions with Financial Institutions by giving them access to users profile( restricted non-appendable access),Using hashing and cryptographic processes the data would safely be called and returned to the DCT network . Thus making sure the whole process is immutable .