KYC Optimization Using Distributed Ledger Technology

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The know-your-customer (KYC) due diligence process is outdated and generates costs of up to USD 500 million per year per bank.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.