Optimized and Dynamic KYC System Based on Blockchain Technology

23 Pages Posted: 6 Oct 2018 Last revised: 10 Jan 2019

See all articles by José Parra-Moyano

José Parra-Moyano

Copenhagen Business School; University of Zurich - Department of Business Administration

Tryggvi Thoroddsen

University of Zurich - Department of Business Administration

Omri Ross

University of Copenhagen

Date Written: March 14, 2018

Abstract

Systems that use blockchain technology to improve the know-your-customer (KYC) process have only been proposed at a conceptual level and all share certain attributes that make their adoption by financial institutions (FIs) very difficult. We propose and program a blockchain-based system that reduces and shares out among the financial institutions that work with a customer the costs of the KYC process and also makes it possible for FIs to dynamically update information related to customers and disseminates this information among participating FIs. Additionally, our system addresses some of the attributes that hinder the adoption of previously proposed solutions by FIs. The result is a programmed, stand-alone solution that can be implemented by FIs to reduce the cost of the KYC process without requiring any central instance to store the customer’s data, and in which FIs share the initial costs of the KYC process as well as the running costs of keeping the information about customers up to date. Our system increases the levels of security and regulatory compliance in the KYC process and significantly reduces the cost of that process for all parties involved.

Keywords: Blockchain, KYC, Distributed Ledger Technology, Blockchain Identity

JEL Classification: Y90

Suggested Citation

Parra-Moyano, José and Thoroddsen, Tryggvi and Ross, Omri, Optimized and Dynamic KYC System Based on Blockchain Technology (March 14, 2018). Available at SSRN: https://ssrn.com/abstract=3248913 or http://dx.doi.org/10.2139/ssrn.3248913

José Parra-Moyano (Contact Author)

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

University of Zurich - Department of Business Administration ( email )

Rämistrasse 71
Zurich, CH-8006
Switzerland

Tryggvi Thoroddsen

University of Zurich - Department of Business Administration ( email )

Rämistrasse 71
Zurich, CH-8006
Switzerland

Omri Ross

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
129
Abstract Views
616
rank
229,013
PlumX Metrics