The Automation of KYC and KYB Verification: Revolutionizing International Paymentsand Self-Sovereign Identity

Your identity is everything.

Personal data identifies you as an individual.

In a world that is constantly evolving, control over your data is power. However, the need to protect this information is critical for both persons as well as businesses.

The Know Your Customer (KYC) and Know Your Business (KYB) process is one that is cumbersome yet necessary; it helps protect both individuals from money laundering, and fraud. However, with the dynamic developments in technology, particularly with block chain this need
not be the case anymore, yet it is still an area that leaves many questions and concerns for many individuals, institutions and industries.

To answer some of these questions Steffy caught up with Tim Brockman, CEO and Founder of IAMX and Bruno Kellenberger, CEO of KYC Spider.

History of KYC Spider AG:

KYC Spider AG, celebrating its 20th anniversary, holds a significant legacy in the data collection field. Over the past two decades, the company has amassed a vast amount of historical data, making it a key player in the industry. This extensive data history is invaluable for ensuring
robust KYC verification processes.

Relevance of KYC for Blockchain and SSI:

1. Streamlining the KYC Process: SSI, enabled by blockchain technology, plays a crucial role in streamlining the KYC process, providing a user-centric view and avoiding open data silos. User data is managed securely within wallets, akin to real wallets, where individuals can opt-in to reuse their data for onboarding processes. Two wallets entering a Decentralized Exchange (DEX) undergo KYC checks, ensuring compliance with regulations.

2. Empowering Users and Enhancing Data Protection: SSI and blockchain technology empower end users by giving them control over their data in line with data protection regulations. Blockchain’s traceability and global scalability enable a common and efficient way to address compliance, fostering individual freedom while ensuring data security.

Benefits of SSI Framework for KYB Requirements:

KYB (Know Your Business) requirements can also benefit from adopting the SSI framework, leading to cost savings and increased efficiency. Currently, KYB is primarily done manually and on an ad hoc basis, posing challenges for businesses and institutions. Leveraging blockchain and SSI can automate due diligence processes, reducing costs and streamlining the onboarding of businesses. Unbundling complex corporate structures to identify the individuals controlling the company becomes more efficient through blockchain technology.

Cost Savings and Efficiency Gains:

The automation of KYC verification can achieve impressive levels of efficiency, with up to 70% automation and potentially exceeding 90% with further simplification. Allocating fewer resources and staff to compliance-related tasks reduces costs for companies. For example, businesses can save significant amounts of money, up to €20,000, by utilizing blockchain-based SSI solutions instead of manual KYC processes. Moreover, automation enables faster and more accurate verification, reducing the time and effort required for repeated KYC procedures.

Data Privacy and Monetization:

SSI and blockchain offer solutions for data privacy in the context of KYC and KYB processes. Decentralized storage of data allows end users to control where their information is stored, ensuring privacy and compliance with regulations. Monetization of data through incentives like
cashback or affiliate programs can be achieved while safeguarding user privacy and security. KYC Spider AG has developed ways to make data reusable without compromising privacy, enabling a win-win situation for all parties involved.

Overcoming Challenges and Ensuring Adoption:

To ensure seamless adoption and integration of automated KYC verification, KYC Spider AG focuses on collecting data in a compliant manner, with no leakage points where third parties could misuse the data. The company’s business model includes monetization initiatives, and
fostering adoption by businesses. By demonstrating the ease of integration and the usefulness of Web 3.0 solutions, companies are more likely to adopt automated KYC processes. Maintaining compliance with regulatory requirements and educating regulators about the benefits and ethical use of blockchain technology are essential steps in achieving widespread
adoption.

Blockchain’s Impact on Developing Countries:
SSI and blockchain technology hold significant potential for developing countries, particularly in addressing financial inclusion and identity challenges. By leveraging blockchain for KYC and KYB processes, individuals without official identification can gain access to financial services and explore new opportunities. Reducing transaction costs and enabling real-time transfers can transform the financial landscape in these regions, empowering individuals and reducing reliance on intermediaries.

Addressing Regulatory Challenges:
Anonymity in decentralized finance (DeFi) protocols, such as SushiSwap or Aave, presents challenges in complying with KYC and anti-money laundering regulations. Education and collaboration are essential to address these challenges. Blockchain technology provides
transparency, allowing regulators to identify suspicious activities while preserving user privacy. Collaboration between regulators, businesses, and the blockchain community is crucial to strike a balance between regulatory requirements and fostering innovation in the financial space.

Conclusion:
The automation of KYC verification through SSI and blockchain technology has the potential to revolutionize the international payments industry. Companies like KYC Spider AG are at the forefront of this transformation, leveraging their extensive data history to drive innovation and efficiency. By addressing challenges, ensuring data privacy, and collaborating with regulators, the industry can unlock the full potential of automated KYC verification, making international payments more secure, efficient, and inclusive.

If you are interested in checking out the full discussion between Steffy, Tim Brockman and Bruno Kellenberger, you can check out the full video on the Financial Fox channel.