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Global Trustee and Fiduciary Services News and Views
| Issue 48 | 2017
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Different technology options
So, how, in technical terms, might the KYC utility
work? Existing technologies and systems would
do the job well as many software companies
already develop sophisticated tools. Using
innovative systems, a utility would work much
like a well resourced compliance department.
Constant cross-checking internally, with clients
and with regulators, would keep the information
up to date and accurate.
Longer term, FinTech would make the utility
more efficient and effective. For example, not
only online news from mainstream sources but
also blogs and social media provide a host of
information about individuals and companies.
Not all this information is reliable, but best
practice suggests this information needs
taking into account. Tools are being developed
that scour the internet for information about
individuals, with algorithms then sorting this
data. For most internal KYC departments,
such tools are nice but perhaps too costly to
have. A large utility, however, would have the
necessary resources.
Digital ID potential
Beyond marginal gains such as these, FinTech
promises major strides forward. For example,
a digital identity is a representation of a
person’s real-world persona in electronic
format. Creating a system of secure, trusted
and accepted digital identities would go a long
way to solving the central KYC challenge of
being sure that a counterparty is who they say
they are. A customer-centric system would
also open the way to creating a range of new,
innovative services.
Digital identity assurance has been an aspiration
for governments, regulators and the private
sector for a number of years. After all, having
a unified system would be useful in financial
services, healthcare, national security, citizenship
documentation, driving licences, online retailing
or even proving your age in a bar. Currently,
internet users have multiple digital identities
for each platform. Managing identities across
applications and platforms is becoming
increasingly challenging and cumbersome.
Digital ID assurance has become a main FinTech
theme, attracting substantial R&D funding
globally as a result. Public authorities around
the world have also sought to promote the idea
in many countries. However, few of the projects
have made progress beyond limited niches.