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Bank De-risking: Why Corporates Should Be Paying Attention to the Blockchain

The current de-risking trend has pushed many corporates in developing countries out of the traditional banking system. New technologies may bring them back.

By Abbas Ali | Updated on October 25, 2018

The concept of identification has always been at the heart of financial services processes. For banks to manage customers’ money securely, they must be certain they know who they are dealing with. It’s a simple premise on the surface, but a hugely complex and costly task in reality.

Financial institutions traditionally relied on physical documents, such as drivers licenses or passports, to verify the identity of individuals or institutions. However, relentless digitalization of banking services from payments to lending, along with the growing threat of cyber fraud, have driven the need for increasingly faster, safer, and more efficient identity solutions.

KYC, short for “Know Your Customer,” rules are intrinsic to modern banking. They require banks to take a major leap forward in identity management, in the effort to prevent fraud, terrorist financing, and money laundering. As regulators around the world continue to ratchet up the strictness and complexity of their domestic KYC rules, they’ve had an unintended consequence. The inconsistent standards between regimes, duplicative processes, and long turnaround times for checks to be completed have created major inefficiencies in the global correspondent banking system.

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