The Pakistan Banks Association (PBA), a group of 31 traditional banks operating in Pakistan, has signed off on the development of a blockchain-based Know Your Customer (KYC) platform. The move is aimed at strengthening the country’s anti-money laundering (AML) capabilities while countering terrorist financing, an initiative led by the State Bank of Pakistan (SBP).

As the Daily Times reported, the PBA signed a contract on March 2 to develop Pakistan’s first blockchain-based eKYC national banking platform. Grupo Avanza has been commissioned to develop the blockchain-based eKYC platform called “Consonance”, which will be used by member banks to standardize and exchange customer data through a decentralized and self-regulated network. This will allow banks to screen existing and new customers and share customer details based on consent.

PBA member banks include international establishments such as the Industrial and Commercial Bank of China, Citibank and Deutsche Bank. The blockchain platform will improve operational efficiency, primarily with the aim of improving the customer experience during onboarding.

Joining other countries in the race to develop a central bank digital currency (CBDC), Pakistan recently signed new laws to ensure the launch of a CBDC by 2025. The SBP will license e-money institutions for the issuance of CBDCs. “These landmark rules are a testament to the SBP’s commitment to openness, technology adoption and digitization of our financial system,” said SBP Deputy Governor Jameel Ahmad.

The use of blockchain technology for KYC purposes offers numerous benefits to the banking industry, including reduced costs and improved security. The development of Pakistan’s first blockchain-based eKYC national banking platform is a significant step towards digitizing the country’s financial system. By standardizing and sharing customer data, Pakistan’s banking industry will be better equipped to fight money laundering and terrorist financing while improving the customer experience during onboarding.

Overall, the development of the blockchain-based KYC platform demonstrates the PBA’s commitment to providing its members with cutting-edge technology to improve operations and customer experience. The move also reflects Pakistan’s willingness to embrace blockchain technology as a means to strengthen its financial system and combat financial crime.