Experimenting with Know Your Client (“KYC”) from a Firm's Perspective to Address Challenges

Shortly after the unsuccessful KYC1.0 industry utility, ambition encountered the same obstructive practical and business realities, which had already formed the existing. This was not something people were eager to push ahead with, and opposition was greater than anticipated. However, the theory was rational, though unexciting. It seems that the scarcity of modern technology and the uninspiring idea were what prompted the criticism. The FinTech remains, as far as I am aware, and looks to be self-sufficient. The purpose of this experiment is to investigate whether the difficulties faced by financial institutions when performing KYC (know-your-customer) procedures, such as verifying the accuracy of the identity information supplied by companies, can be addressed more effectively from the viewpoint of the company. The FinTech observed that the solutions available in the market today for KYC were tailored to the needs of the FIs, as they are the end customer and a recipient of payment from the provider. This is an understandable approach as the provider needs to meet their customers' expectations and requirements. It follows logically that there are two potential ways forward for FIs with regard to KYC solutions. The first is to create a storage system containing authenticated or verified identity information that can be accessed by FIs, while the second is to create a utility offering KYC-as-a-service for a group of FIs. An example of the former can be seen in Singapore, where SingPass and CorpPass are already in use. The latter option was pursued by ABS/MAS but was ultimately unsuccessful, owing to the complexity of harmonizing KYC processes and data across a multitude of FIs' business units, the lack of an experienced supplier and operator, and the upfront capital expenditure being multiple times higher than the running costs for the industry. The FinTech believes that a more user-friendly and operationalizable answer could be produced if the issues regarding KYC were considered from the viewpoint of the firm instead of the FI. This would particularly apply to smaller FIs (e.g. asset managers & hedge funds) and smaller multinational corporate entities ("MNCs"). The FinTech proposes a digital identity vault be developed for the companies in question, to store their identity data. Moreover, the vault should enable the firms to seek external validation of the identity information, as well as present it to requesting FIs. plentiful. The plenteous advantages of such a digital identity vault solution are evident. The FinTech has envisioned how the digital identity vault can operate as follows: The success of the experiment has the potential to result in a new perspective on how to deal with KYC issues, and optimally resolve them. Its adoption by a wide range of asset managers, hedge funds and multinational companies could bring relief from the difficulties associated with doing business with a major financial institution in multiple jurisdictions.

Source: https://medium.com/@notherArmchairEconomist/experiment-to-solve-challenges-with-know-your-client-kyc-from-firms-perspective-instead-of-18d89faa6175?source=rss------fintech-5