KYC blockchain to boost UAE banks' profitability
The six banks that are part of the KYC blockchain consortium are Emirates NBD, Emirates Islamic, HSBC Bank Middle East, National Bank of Ras Al Khaimah, ADCB and CBD.
The establishment of the Know Your Customer (KYC) blockchain platform by Dubai, along with six banks, is credit-positive for UAE lenders because it will ease their onboarding and exchange of customer data, which will support asset quality and profitability, Moody's Investors said on Wednesday.
The six banks that are part of the KYC blockchain consortium are Emirates NBD, Emirates Islamic, HSBC Bank Middle East, National Bank of Ras Al Khaimah, Abu Dhabi Commercial Bank and Commercial Bank of Dubai. These banks together held around 44 per cent of total banking assets in the UAE as of June 2019.
"We expect the KYC blockchain consortium to support the asset quality of UAE banks primarily by reducing operational risk. The platform will facilitate faster and more secure onboarding, and exchange of authenticated and validated digital customer data and documents through distributed technologies powered by blockchain,"said Mik Kabeya, analyst at Moody's.
"This will ensure improved compliance with local and international KYC regulations while reducing the risk of data theft. Non-compliance with KYC regulations, particularly for anti-money laundering and terrorist financing, can have material legal implications and result in sizeable penalties for banks. Theft of client data can cause material reputational damage," he said in a note released on Wednesday.
In addition, the platform will support regulatory oversight of banks' collection and management of KYC data.
"We also expect it to help credit risk management with better data for client underwriting and debt collection. The consortium will support the franchises and profitability of UAE banks by improving customer service through shorter turnaround times for customer onboarding, including opening a bank account. The platform will reduce the financial cost for banks of managing the paper-based KYC data of already registered companies," he added. - email@example.com
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