User-Centered Design Principles for Decentralized Identity in Banking KYC

Abstract

Decentralized identity (DID) systems promise improved privacy, user control, and interoperability in regulated digital identity verification, including in banking contexts. However, existing DID implementations often introduce usability barriers that limit adoption, particularly for non-technical users navigating Know-Your-Customer (KYC) onboarding—a mandatory process requiring banks to verify customer identity to prevent fraud and financial crime. This poster presents a UX-centred, four-phase mixed-methods investigation comparing a high-fidelity DID-based onboarding prototype with a traditional Web2 (centralised, platform-owned) KYC flow. Results show that DID significantly reduced task completion time (178s vs. 665s), improved perceived usability (SUS: 93.4 vs. 71.3), and increased user trust (6.1 vs. 5.1 on a 7-point scale). At the same time, wallet setup, private-key management, and the absence of onboarding-phase recovery guidance remain critical sources of user anxiety. We contribute five user-centered design principles for DID-enabled financial onboarding and discuss implications for designers working at the intersection of Web3 (decentralised, blockchain-based systems), fintech, and regulated digital services.