The Pakistan Association of Banks signed a contract with Avanza Group to develop a blockchain-based Know Your Customer (KYC) sharing solution. With the customer’s consent, any KYC data collected by one bank’s compliance department may be shared with another.

Avanza’s ‘Consonance’ eKYC platform will mean KYC processes will be further standardized to facilitate data exchange between banks using the shared blockchain.

From a consumer perspective, if someone is looking for a mortgage, it can make the process much easier if KYC data can be shared. It could make it easier to change banks, but there is always considerable customer inertia.

Shared KYC brings several benefits to banks, with a massive reduction in cost if the bank can use the data collected elsewhere. It also removes a lot of friction in signing up new clients.

However, there is a third potential benefit that consumers should be aware of. When a consumer agrees to share data, they must ensure that they only agree to share KYC data, not other data that may infringe on their privacy.

Some have argued that there is a risk of a single bank introducing weak KYC across the entire banking system, undermining anti-money laundering (AML) processes. To counteract that, sometimes the onus falls on the bank receiving the data, as in the case of the UAE’s shared KYC system. It is up to the bank to assess whether the other bank provides reliable data, and the receiving bank is responsible for that assessment.

Avanza was involved in implementing a similar solution in Bahrain and in its home country of the United Arab Emirates, it was the partner of a shared trade finance blockchain, UAE Trade Connect. However, the United Arab Emirates implemented a KYC blockchain platform with another technology provider, norbloc. Sri Lanka has explored a similar path, and Australia included KYC in its blockchain roadmap. In Switzerland, Wecan has helped banks to use blockchain for the KYC of intermediaries in private banking.