Central Bank of Colombia & Others Test R3 Blockchain System For KYC Requirements
R3 Consortium, Colombia’s Central Bank And 39 Others
On June 28, 2018, R3 published details of a new project consortium that will participate in testing a new blockchain system. A total of 39 other diverse businesses from all over the globe are participants in the program. Interestingly, one of those happens to be the Superintendencia Financiera de Colombia, the Colombian Central Bank.
The rollout was essentially a pilot program that aims to determine exactly how blockchain technology can enhance business’ client data. With the increased regulatory impetus of KYC and AML legislation worldwide, the pilot program comes as a blockchain response that makes it easy for companies to comply with relevant regulation. One singular success involved the execution of some 300 transactions in a KYC app on top of the Corda platform.
R3 is an enterprise blockchain coding concern looking to find and address business blockchain use cases, based on users’ needs. The company has diverse association across industries, and besides the Colombian Central Bank, has other public sector interests as well. The company’s Corda platform has just been offered in Corda Enterprise form, and has so far found appeal in the healthcare, shipping, banking and insurance arenas.
R3 Addressing Real-World Issues
R3’s pilot program epitomizes the vaunted rollout of blockchain technology to mainstream business. Apart from the Central Bank of Colombia, other participants in the pilot are ABN AMRO, Bank of Cyprus, Egypt’s Commercial International Bank and many other established fintech and other players.
There is a preponderance of financial institutions, with Deutsche Bank, KE Kookmin Bank, ING and National Bank of Egypt all on board. There is also another South American participant – of particular interest to Latin America – in the form of a Peruvian AFP. That pension funds are looking at the R3 offer is testament to a growing credibility and the widespread application of blockchain technology.
A snapshot of pilot transactions show them effected successfully across eight different time zones, in 19 countries around the world. Some 45 nodes were employed by users on Microsoft Azure as they collected KYC intel using the platform. Customers were given the option of opting out of the exercise as the participants indulged in information gathering and messaging. The pilot was enabled by R3’s Corda platform, in conjunction with the R3 dapp, CorDapp.
Legacy protocols around collecting client information are often taxing for the client, unnecessarily complicated, and slow. Apart from anything else, the end results are commonly ineffective in addressing the prime purpose behind such behavior.
In an era where fragmented data has become officially irregular, the pilot program has demonstrated the elegance of the decentralized ledger applied to business processes. The pilot saw participants not only able to effectively build and manage customer identities, that included legacy documentation. It also allowed for tailored permissions to access to be given to nominated parties.
Blockchain Into The Future
The system architecture also allows banks and others to shrink costs while doing away with the imperative of each institution having to actualize their clients’ data. R3 CEO, David Rutter, has noted that the requirements of KYC presented substantial challenges to financial institutions. He said that applied processes were currently often “slow and time-consuming.” He added that, as the company brings more and more similar clients on board, the need for an elegant blockchain solution to KYC has not just grown, but also been vindicated by their pilot program.
According to Rutter, the project doesn’t only show how blockchain can let varied institutions manage their own identity, but that it “also validates the design choices [they] made in [their] approach to privacy on Corda.”
The company has endured mild jibing from some quarters who pointed to yet unneeded considerations in the Corda Enterprise build. The company has responded by saying that interoperability and other considerations loom large in business’ future. As a pilot, the program has been a complete success, and in it R3 has positioned itself to be a default solutions provider to global fintech and other industries.