KYC Optimization Using Distributed Ledger Technology

26 Pages Posted: 13 Jan 2017 Last revised: 8 Aug 2017

See all articles by José Parra-Moyano

José Parra-Moyano

University of Zurich - Department of Business Administration

Omri Ross

University of Copenhagen

Date Written: August 4, 2017

Abstract

The know-your-customer (KYC) due diligence process is outdated and generates costs of up to USD 500 million per year per bank. We propose a new system, based on distributed ledger technology (DLT) that reduces the costs of the core KYC verification process for financial institutions and improves the customer experience. In the proposed system, the core KYC verification process is only conducted once for each customer, regardless of the number of financial institutions with which the customer intends to work. Thanks to DLT, the result of the core KYC verification can be securely shared by customers with all the financial institutions that they intend to work with. This system allows for efficiency gains, cost reduction, improved customer experience, and increased transparency throughout the process of onboarding a customer.

Keywords: Blockchain, Know your customer, Banking, Distributed Ledger Technology

Suggested Citation

Parra-Moyano, José and Ross, Omri, KYC Optimization Using Distributed Ledger Technology (August 4, 2017). Available at SSRN: https://ssrn.com/abstract=2897788 or http://dx.doi.org/10.2139/ssrn.2897788

José Parra-Moyano

University of Zurich - Department of Business Administration ( email )

Rämistrasse 71
Zurich, CH-8006
Switzerland

Omri Ross (Contact Author)

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

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