Blockchain KYC Data Sharing With Smart Contract Access Control
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Solution Overview
Problem
Current KYC systems are prone to errors, inconsistencies, and lack secure, decentralized data sharing between financial institutions, leading to redundant processes and privacy issues.
Innovation Solution
A method and system using a blockchain to securely share KYC data by registering it on a distributed ledger through a smart contract, accessible with a private key, enabling seamless access and updates across institutions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If manual KYC verification is performed by bank officials, then identity verification can be completed, but errors and inconsistencies occur leading to compliance issues and reputational damage
Solution Approach 1:
The system enables self-service KYC verification where users can update their own KYC information through biometric authentication. The blockchain automatically verifies and updates KYC data without requiring manual intervention from bank officials, eliminating human errors while maintaining verification reliability.
Solution Approach 2:
The patent replaces the mechanical manual verification process with an automated digital system using blockchain technology and biometric authentication. This substitution eliminates the need for physical document handling and manual data entry, reducing errors and inconsistencies in KYC verification.
2Reliability
If physical KYC documents are handled at multiple points within banks, then verification can be performed, but customer identity privacy is compromised
Solution Approach 1:
The blockchain acts as an intermediary layer between banks and customer KYC data. Instead of directly handling physical documents, banks verify KYC information through the blockchain's distributed ledger, which stores encrypted data. This intermediary mechanism enables verification while protecting customer identity privacy through cryptographic security.
Solution Approach 2:
The system creates digital copies of KYC data on the blockchain rather than handling physical originals. Multiple banks can access and verify copies of the KYC information stored on the distributed ledger without exposing the actual customer identity documents, maintaining privacy while enabling verification.
3Reliability
If customers complete KYC process separately with different banks, then each bank can verify identity, but the process becomes slow and redundant
Solution Approach 1:
The blockchain-based KYC system provides universal verification capability across multiple banks. Once KYC data is registered on the blockchain, any participating bank can verify the customer's identity by accessing the distributed ledger, eliminating the need to repeat the KYC process at each institution and significantly improving processing efficiency.
Solution Approach 2:
The system performs preliminary KYC verification by storing verified customer data on the blockchain in advance. When customers approach different banks, the verification has already been completed and the results are readily available on the distributed ledger, eliminating redundant verification steps and speeding up the process.
4Ease of operation
If centralized KYC data storage is used, then data access is simplified, but security and decentralization are compromised
Solution Approach 1:
The system segments KYC data storage across multiple nodes in a distributed blockchain network rather than concentrating it in a single centralized location. Each node holds a copy of the encrypted KYC data, providing both security through decentralization and ease of access through the distributed ledger's query capabilities.
Data Source
AI summary
A system and method for sharing know your customer (KYC) data using a blockchain are disclosed. The method includes receiving a first request from a user to access at least one service and obtaining user identity details. Next, the method includes registering at least one KYC data for the user. Next, the method includes storing the at least one KYC data into at least one database associated with the first institution. Next, the method includes loading the KYC data onto a distributed ledger through a smart contract, the KYC data is accessible with a private key associated with the KYC data. Next, the method includes receiving a second request to access the KYC data, from a second institution. Next, the method includes providing access to the KYC data to the second institution based on an execution of the smart contract using a successful verification of the private key.