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The IOTA Foundation has developed a reusable Know Your Customer (KYC) Proof of Concept (PoC) using IOTA's open-source Self-Sovereign Identity (SSI) demonstration app Selv in collaboration with a Dutch bank de Volksbank.
The IOTA Foundation to Develop Reusable KYC PoC on Selv
This is to avoid the time-consuming procedure of creating accounts and signing up for services by repeatedly input the same information.
It is especially inconvenient when registering for a financial service, such as a bank account or a bitcoin exchange account.
To comply with KYC and Anti-Money Laundering (AML) legislation, such services typically need a user to produce digital copies of sensitive personal papers for verification.
A user will be required to supply such documentation for each account of this kind that they establish.
As part of the recently announced IOTA Identity, the IOTA Foundation has been developing a mechanism called the Identity Actor. The Identity actor is defined as follows in the IOTA blog:
The Identity Actor is a software that can send and receive Self-Sovereign Identity (SSI) and data management requests and answers. This indicates that the IOTA Foundation is developing a program to teach other Identity Actors how to "speak identity."
The IOTA Foundation's Goal Is to Help Financial Institutions Become More GDPR Compliant
The demonstration of this technology aims to demonstrate how SSI may be used to construct a secure and reusable KYC that complies with the General Data Protection Regulation (GDPR).
The Selv app's demonstration allows users to establish a unique ID and perform a randomized KYC. The KYC is then saved as a Verifiable Credential on the app.
The user may then use their KYC credential in the Selv app's simulated environment to undertake tasks such as forming a new company, opening a bank account, or even purchasing liability insurance.
It removes the need to input the necessary information and submit documents for each of those operations. Instead, individuals must only disclose their Decentralized Identifiers (DIDs) and demonstrate ownership of them.
Regulation and Data Protection in the Banking Industry
In addition to the need for improved KYC verification, governments have also called for better user data handling. As a result, businesses are hesitant to store customer data if they cannot ensure its security.
The IOTA Foundation, through its SSI initiatives, and particularly the newest Selv demo, aims to make financial institutions more compliant with legislation while providing clients control over their data and how it is handled.
Michiel Sollet, Innovation Manager of de Volksbank, shared his thoughts:
The most significant benefit of Decentralized Identity technology is that it places complete control over personal data in the hands of the owner: the consumer. A decentralized network will simplify the KYC process for banks and clients alike.
De Volksbank, as a bank that adapts to its clients' demands rather than the other way around, sees enormous potential in DID to further progress its aim to provide financial services based on the shared value concept. This implies that all four of our stakeholders, consumers, society, employees, and shareholders must enjoy equal added value.