A futuristic KYC process is the latest offering from Blockchain Technology!

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KYC – Know Your Customer is the process implemented by different financial institutions for obtaining information about personal identity. Decentralized verification or KYC process is the gift of blockchain technology and is a straightforward process of authenticating client, employee, or other personal information using validating factors. With the advent of distributed ledger technology (DLT) like blockchain, many opportunities arise to deliver better compliance.


How does blockchain-based KYC work?

Best stated by the blockchain experts of the Best blockchain development company in Kolkata, the blockchain-based KYC process is the process of using blockchain in KYC that is covered through several stages. With increased regulations in place, the industry needs to change like blockchain-based KYC which will benefit the financial ecosystem and will be more appealing to other industries.


The concept of blockchain-based KYC is very simple to understand and things occur in multiple stages in a distributed ledger ecosystem. When this form of KYC process is deployed, the user has to pass through a platform to complete a one-time setup using personal documents. The ‘Hash function’ will be uploaded to the distributed ledgers in the next step. Now comes the FI2 transaction which would know if the KYC shared is the one received by FI1, and if the hash function does not match FI2 then the KYC documents will be validated through other processes.


What are the benefits of Blockchain KYC?

KYC verification process like blockchain KYC is just an offering of blockchain. However, there are many other benefits of blockchain-based KYC to be explored.

·  Allocation of data:

With the introduction of the blockchain-based KYC, process data is not guided to a decentralized network that can be accessed by network users after the required permission is granted. Apart from all other benefits, the technology offers great data security as the data can only be accessed through user permission. This eliminates unauthorized data access and streamlines data procurement.

·  Operational efficiency:

Blockchain-based KYC is best known for a streamlined data sharing process on a permissioned network which hugely lowers the effort and time consumed by the initial steps of KYC. This on the other hand lowers regulatory and compliance expenses for the company.

·   Information validation:

Blockchain-based KYC systems are best known for transparency and immutability that allow financial institutions to validate the trustworthiness of data that is submitted on the DLT platform. Up-to-date data can be accessed securely which is the biggest achievement of decentralized KYC, and it also lowers the labor-intensive efforts of an organization.

·  Real-time data update:

For the data being shared within a distributed ledger, every time a KYC transaction is performed the data will be updated in real-time. With blockchain technology, other participating institutions get to access real-time updated data. New addition or modification of documents will be notified in real-time as well.

Wrapping up, with immense potential of the blockchain-based KYC process can be a viable proposition that customers, financial institutions, and other compliance authorities can adopt. Only time will tell how blockchain-based KYC implications will be, but the technology promises to increase the efficiency of your businesses.

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