5 Immediate Business Needs That Portable KYC Solves


Know Your Customer or KYC is a regulatory requirement that delivers trust between a financial institution and its customer. Without KYC, a bank’s assets would be at risk — including those of its good customers.


How Does KYC Solve Pressing Business Needs?

Unfortunately, the current processes surrounding the execution of KYC are inefficient and outdated. Across the globe, financial institutions find themselves struggling with conducting time-consuming, cost-heavy checks in order to verify their customers’ identities. Not only do they face massive fines if they fail to comply with existing regulations but such procedures can be complex to navigate, particularly when institutions must protect user data.

“Evolving technology means that banks need to evolve the methods through which they keep customers safe,” cautions Ian Henderson, CEO of company intelligence provider Kyckr in Forbes. “Some are embracing new technology and advancements, yet some are lagging behind, putting their institutions at risk.”


The Cost of KYC

Global fines for failing to prevent money laundering and other financial crime have surged to record levels. In 2022, banks and other financial institutions were fined almost $5 billion for anti-money laundering (AML) infractions, breaching sanctions, and failures in their KYC systems, representing a 50 percent increase over 2021, notes the Financial Times.

Unfortunately, KYC checks are not one-and-done. They are not only performed when a customer digitally onboards and opens an account by providing the necessary documents and identity verification. Institutions are required to conduct KYC checks and monitor customer transactions on an ongoing basis, which takes up a significant amount of time and resources.

Apart from time and effort, complying with KYC rules also costs banks money. According to research firm CB Insights, banks spend up to $500 million annually on KYC compliance and customer due diligence.

As a way to bring efficiency, speed and lower costs, new technologies are rapidly being introduced to provide solutions for the KYC and identity verification issues that financial institutions face. 

A portable KYC blockchain solution enables individual customers to control their own identities. Using self-sovereign identity standards, consumers can authenticate, validate and digitally onboard to any app — not simply a financial institution — that requires that the consumer present credentials. In this manner, there is more control by the consumer and trust on the part of the financial institution.

Benefits of Portable KYC

There are several key benefits of portable KYC for businesses. Let’s have a look at a few.


1. Data Security 

The decentralized network of blockchain results in both parties securely accessing data after permission has been given to them. Essentially, instances of unauthorized access are eliminated because the security offered by the blockchain means that data can only be accessed after permission has been granted by the customer. This security benefits both the customer and the institution.


2. Fully-managed System

Legacy KYC processes often require the use of several disparate systems and databases that must each run their own checks in sequence, thereby slowing down the process. By comparison, portable KYC can expedite customer onboarding time and with no third-party, licensed databases, all resulting in speed and efficiency. Instnt’s fully-managed customer acceptance platform saves both time and resources since it eliminates the need to manage various vendors or models. 

Instnt Access™, the first portable KYC solution, builds upon Instnt’s core platform to allow good customers to access any product or service with a single click. With Instnt Access™, customers no longer need to endure multiple sign-ups, varying sign-up experiences, repeated personal data collection, KYC compliance re-verification, or re-authentication friction. 


3. Lower Costs

Blockchain technology for portable KYC can help reduce the human effort and cost involved in KYC compliance. Using blockchain for KYC purposes could reduce personnel requirements for banks by 10 percent, equating to cost savings of up to $160 million annually, notes CB Insights. By leveraging a fully-integrated and automated AI technology solution like Instnt AcceptTM, institutions can immediately reduce operational costs and grow revenue to focus on growth rather than fraud and compliance management.


4. More Accurate Data

Because transactions are transparent, carrying out KYC on the blockchain enables financial institutions to validate the accuracy of the customer’s identification data in the distributed ledger. Since one owns one’s identity and data and is the only one with the ability to change them, financial institutions understand that they are accessing the most trustworthy, up-to-date user data. 


5. Real-time Information

Currently, each time a customer digitally onboards with a new bank or financial institution, there is no way for that new institution to know the last time that that customer went through the process with another institution. With portable KYC, the identity is “updated” with information informing a new institution that the customer previously digitally onboarding somewhere else, thanks to distributed ledger technology.

Portable KYC enables other participating institutions to access real-time updated information with a guarantee that every time there’s a new addition to the documents or there are any modifications, they’ll be notified. Without KYC on the blockchain, financial institutions stay in the dark as to whether their new customer has also recently digitally onboarded or opened accounts at other institutions.



About the Author

Instnt Inc. is an AI managed customer acceptance platform founded and operated by serial entrepreneur Sunil Madhu, founder, and former CEO of Socure. Instnt is on a mission to bring frictionless inclusion and continuous identity assurance experiences for businesses and their customers through proprietary artificial intelligence technology, open standards, and a collaborative effort in the identity governance industry. Instnt powers various financial institutions, lenders, fintechs, banks, and credit unions across North America. For more information, please visit www.instnt.org