Signing up for new services and websites is a repetitive and bothersome process. This is especially true when the new service is a financial one, such as at a bank, insurance company or cryptocurrency exchange. To follow the required Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, the financial services must request digital copies of many sensitive personal documents. Unfortunately, this process must be repeated at every bank, insurance or exchange you sign up for.
The IOTA Foundation recently released a blog post about the Identity Actor, which is the next step in the IOTA Identity framework developments. It explained how signing up for a service offered by a bank will become a much easier process with the help of the Identity Actor. Recently, the IOTA Foundation and de Volksbank have collaborated for a one-off Proof of Concept (PoC) to show how Self-Sovereign Identity (SSI) can modernize the KYC process by introducing a privacy-first and GDPR-compliant reusable KYC demo. This PoC is built with Selv, an open-source app built by the IOTA Foundation, and uses IOTA Identity.
In the PoC, we allow the users to generate a new identity on IOTA and provide a randomized KYC. This step mimics a KYC process that the user has, at some point, completed at a trusted organization. The randomized KYC is stored in the form of a Verifiable Credential within the Selv app. The demo consists of a simulated environment where the user can use their reusable KYC credential to set up a new company as well as a corporate bank account and liability insurance at SNS Bank (a de Volksbank brand), all with one click of a button. This showcases how a previously lengthy and tedious process that took two separate KYC procedures – one for setting up the company, another for the bank account – can now be streamlined significantly. The users also gain control over additional Verifiable Credentials that they use in the process, such as proof of having liability insurance, and that may also come in handy for other interactions with different parties in the future.
Try out the demo yourself, in either English or Dutch, to experience how SSI will revolutionize the sign-up process for any (financial services) in the future. The demo is designed to test and raise awareness of the possibilities of Self Sovereign Identity. Learn about de Volksbank’s vision for this project by checking out their blog post.
Regulations for the financial sector
Several states around the world have increasingly been pushing for stricter privacy regulations. This trend started with the European Union’s General Data Protection Regulation (GDPR), which has set the standard for privacy laws across the globe since 2016. It has become increasingly beneficial for companies to no longer store customer information to avoid the burden of responsibility of securing this sensitive data. Legacy processes will have to be redesigned to fit this new model.
Forward-thinking companies, such as de Volksbank, are planning ahead and encouraging their customers to take back control over their own data. This aligns with the vision of the IOTA Foundation’s SSI projects: the IOTA Identity framework and the Selv demonstration platform. The SSI model provides a win-win situation, not only because banks become GDPR-compliant by design but also because it empowers customers to manage data that should never have been out of their control.
Michiel Sollet, Innovation Manager at De Volksbank, said: “The biggest upside of Decentralized Identity technology is that it puts control of personal data firmly into the hands of the owner: the customer. A decentralized ecosystem will make the KYC process more hassle-free — for banks and customers alike. Being a bank that adapts to its customers’ needs rather than the other way around, de Volksbank sees great potential in DID to further advance its ambition to carry out its banking services according to the principle of shared value. This means that our stakeholders – all four of them – must experience equal added value: customers, society, employees and our shareholders."
SSI has become all the more important with the updated Electronic Identities And Trust Services (eIDAS) regulation recently proposed by the European Commission. The updated regulation contains many SSI concepts and opportunities and defines a European Identity Wallet, similar in functionality to Selv. The regulation doesn’t just suggest but requires larger financial services to accept digital credentials from a European Identity Wallet. So far, SSI adoption has been limited due to a lack of public sector support and difficult-to-use SSI frameworks. Now, with the new regulation and the maturity of the IOTA Identity framework, the IOTA Foundation is positive that SSI adoption is only a matter of time.
Selv: A versatile demonstration platform
The demonstration makes use of Selv, an open-source SSI demonstration app developed by the IOTA Foundation. The goal of the mobile application has always been to explore potential IOTA Identity use cases with our partners on a PoC level, using a single shared platform. With the recent update, we have also improved our website and integrated all demonstrations in a useful demo overview. Due to recent developments, such as the promising EU eIDAS regulations and the maturing identity framework, the team is currently considering moving Selv beyond just a demonstration app.
Selv hosts three different demos that showcase the power of IOTA Identity and how it might change the way we interact both online and offline. These demonstrations run on the mainnet of IOTA, something fairly unique in the SSI world as most projects need to avoid fees or encounter scalability issues. With the help of recent new hires in the IOTA Foundation’s Identity team, we will be updating all Selv demonstrations to utilize the new IOTA Identity Actor in the near future. For now, the demo showcases the concepts of SSI well, and the code will soon be an excellent showcase for how to use the IOTA Identity framework.