This is not only a problem for individuals; because such a solution is lacking, financial institutions – and other organisations required to verify their customers’ identities – do not have a straightforward and inexpensive mechanism for receiving verified identity data for new customers applying in a digital transaction.
Any reporting entity that has conducted a Customer Due Diligence process for a customer with online access to their services possesses linked, verified attributes to digital authentication credentials. In the process of conducting their own Customer Due Diligence obligations, other reporting entities may request verified attributes, which can then be supplied by other reporting entities at a greatly reduced cost. Where possible, multiple other reporting entities can attest to the legitimacy of the verified identity, reinforcing confidence in the identity with little or no marginal cost.
First, manual Customer Due Diligence processes no longer need to be repeated for the same customer by different AML reporting entities. Overall, the cost of Customer Due Diligence will be reduced for all participating reporting entities. Second, smaller AML reporting entities unable to afford manual Customer Due Diligence, or reporting entities with no physical presence, are able to leverage the verified identities established by other entities. Afterwards, they may add their own weight to the verified identities based on their own ongoing interactions with their customers.
Doing so improves confidence in the solution’s value to the Customer Due Diligence process by ensuring that any detected identity fraud becomes known, and does not have any perpetual impact.
Reporting entities gain value by consuming attestations of verified identity. They provide value by either making attestations (with attestations backed by stronger processes being worth more), or by hosting solution infrastructure and providing other reporting entities with access. By taking into account value gained and value provided, all participating agencies can fairly share the costs of maintaining the solution, while also enabling a safer, more secure solution for the customer.
The concept of self-sovereign identity stems from the idea that individuals and organisations should be in control of their data, and should own their digital identity as inherently as they own their physical body or company. As such, the concept necessitates the ability for people and businesses to store and manage their identity and activity data on their own devices, without relying on a centralised data repository.
Consider how people have managed their identities in the decades preceding the digital era, and even today. Most people have a drawer, cabinet, folder, or some other safe location where they store their non-digital identity documents (such as their birth certificate, passport, and utility bills). Rather than storing these documents with a third party, we hold onto them
Industry Context and Future Business Models
The full potential of blockchain technology is yet to be realised. With the right policy and approach, New Zealand can benefit from its development; economically, socially, and environmentally. Blockchain is being applied to transform fintech, agriculture, health, transport, smart grid energy systems, climate response, education, public services, and international development. It has the power to create new industries that New Zealand can participate in. Most importantly, this technology is inherently decentralised. Even more than the open internet,
It has the power to create new industries that New Zealand can participate in. Most importantly, this technology is inherently decentralised. Even more than the open internet, it breaks down physical barriers that New Zealand has faced when attempting to participate in high-value global commerce.
● The percentage of unconverted customers due to AML compliance friction
● The value of new business that is otherwise unobtainable without a better KYC solution.