Knowing your customer by utilising blockchain

Opening a bank account without any paperwork may sound bit exaggerated but is about to be reality soon in the UAE. The second DIFC Fintech Hive programme selected Serbia-headquartered startup Blinking to bring in its solution to further enhance consumer expereince to the UAE's progressive banking sector.
Mohammed Shahid Khan, vice-president for the Mena at Blinking, said: "The company is a mix of university professors and students working on a project to build a digital identity wallet."
"The company shaped the product to build a GDPR-compliant digital identity solution with multi-factor authentication built into the system. The days in which you can make a payment by scanning your face from your mobile device are not that far and same applies to those when a customer can open a bank account without having to go to the bank."
Blinking built a blockchain-based KYC - know your customer - solution that allows customer from one bank to apply for a service or open a bank account with other bank without having to visit the branch physically and has completely got rid of the use of paper in the entire process.
This has allowed the startup to drastically reduce the on boarding time required for banks and the cost involved.
"Really simple: digital identity is a real problem, which, if properly addressed, can be resolved and thus affect a lot of people across many markets. Blinking is one of the best applications of one of the most interesting technologies currently out there on blockchain," said Alex Migitko, co-founder and CEO.
Blinking was selected as one of the fintech startups to be part of DIFC Fintech Hive and Dubai Future Accelerators.
"The DIFC Fintech Hive programme helped us to understand the regional banking system and meet key banks in the banking industry. Being part of the Dubai Future Accelerators programme gave us a chance to work very closely with government entities. The commitment that the government has to improve the experience of people living in Dubai is truly inspiring and something that cannot be witnessed in other markets. The entire experience was amazing for us," added Khan.
"A customer in the UAE will soon be able to open a bank account from his home by scanning a QR code - quick response code - and scanning his face or fingerprint. We are currently having discussions about using a Blinking in UAE with multiple banks and an exchange house, as we expect to see our first offering with one of the largest bank in the UAE in first-quarter of 2019."
Blinking is a B2B solution. It allows banks to reduce the customer onboarding time and cost associated with it. We will charge banks per transaction fee for onboarding each customer.
The banks charge other banks that are members of the consortium and the money will be distributed depending on which entity performed which action. It is a win-win for everybody; banks can reduce the overall cost and help other banks to onboard customer and reduce overall risk in the financial system.
Blinking is a self-funded company that exists a bit over a year now and is planning to raise about $2 million by first quarter of 2019. The venture has a team of 25 members with new projects, pilots and markets in plan for the following year.
"We are definitely on the lookout for potential investors who want to help us scale our business further," said Khan.
"We have the expertise, but the missing puzzle to make digital identity a reality in these new markets are partners, and not only in the financial sense. We are most interested in strategic partners with sufficient connections in the industries we are targeting," he pointed out.
So how is Blinking different from its peers in the UAE? Digital identity on blockchain has been a hot topic in the IT community worldwide. There are many companies building digital identity solutions but most of them are either on a public blockchain which are still underdeveloped and can't scale effectively, while few had ICOs or are token-/cryptocurrency-based, which Blinking thinks is a failed model from the start.
Most of the solutions are in the idea phase or are simply far from complete as a software or system that businesses or the market can rely on.
Blinking is built on top of Hyperledger Fabric, a private, permissioned blockchain and IBM private cloud solution providing a lot more scalability, easier integration with legacy technologies and therefore flexibility making it a good business solution.
"In one of our conversation with a big international bank we came to know that there has been only two blockchain implementations for KYC globally," said Khan.
"One is a proof of concept by the Monetary Authority of Singapore and a full-scale pilot implementation by Blinking in Serbia with five international banks using the solution to share the KYC. If we look at the geographical disparities, Singapore - a hub for Fintech activity and Serbia are at extreme ends of the fintech spectrum," he added. - sandhya@khaleejtimes.com