Abu Dhabi Global Market (ADGM) recently announced the successful completion of the first phase of a blockchain-based electronic-Know-Your-Customer (e-KYC) utility project. According to the press release published on December 4, 2018, the e-KYC had significantly simplified and improved the KYC process by providing an immutable audit trail.
e-KYC Project Demonstrates Tangible Benefits
The e-KYC project was a Financial Services Regulatory Authority (FSRA)-led collaboration with many major financial institutions from the United Arab Emirates.
These financial institutions which make up a consortium include the Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Al Ansari Exchange, Al Fardan Exchange, First Abu Dhabi Bank, and the UAE Exchange. The FSRA initially launched the project in March 2018.
The goal of the e-KYC project was to develop a Proof-of-Concept (PoC) to explore different technological and operational models of the e-KYC utility. The FSRA also spoke to the consortium members to create a governance framework and business model where the e-KYC project can operate sustainably.
While ADGM has just completed the first phase of the e-KYC, the project had already demonstrated clear, tangible benefits including the ability for all consortium members to successfully share and validate simulated KYC documents and data updates about the client in a secure environment. Furthermore, individual clients can also decide how their data is distributed, which also serves as an incentive to ensure that clients keep their data accurate and updated.
“By harnessing the power of technologies such as blockchain, the e-KYC project has demonstrated tangible benefits that may be offered by an e-KYC utility for financial institutions in the UAE,” said Richard Teng, the CEO of the FSRA of ADGM.
“In addition to enhancing KYC checks across the industry, the utility can achieve significant cost efficiencies and financial inclusion driven by unified KYC standards.”
Preparing for the Second Phase of the e-KYC
After the successful conclusion of the first phase of the e-KYC, the FSRA is looking to commence the second phase which involves facilitating access to banking services for small and medium enterprises.
The FSRA is open to and welcomes constructive feedback and interest from the industry, especially as the project moves forward.
Umair Hameed, a Financial Services and Advisory Partner from KPMG noted that it’s incredibly encouraging to see ADGM take the initiative to bring together members from the public and private sector to collaborate and boost innovation in the UAE. Strong partnerships are vital when it comes to driving technological advancement and is essential for the UAE’s fintech strategy.