Almost every application and website we use today requires our personal credentials in order to create an account and use a service. This process is so widespread, that most of us have hundreds of accounts across multiple services, and sharing our credentials is the norm.
Some time ago, developers realized it would be easier to create linked profiles through the likes of Google or Microsoft 365, or social media platforms such as Facebook and Twitter, to log in to a range of services. Now, the majority of us are used to signing up to new services in seconds through one account.
However, for financial applications and accounts, simple details about an individual are not enough to prevent bad actors from entering the space, such as identity thieves and fraudsters. According to PwC, identity theft and fraud cost companies an eye-watering US$42bn in the last 24-months alone, and this problem is growing year-on-year.
Instead, when it comes to onboarding customers to a new service such as a bank or exchange, users are required to upload identity documents to comply with know your customer (KYC) and anti-money laundering (AML) requirements.
These requirements are important to prevent crime, but they require a great deal of sensitive information from customers. Not only do customers need to provide in-depth personal information, but they also represent a significant hurdle in the new customer onboarding journey, and demand a significant investment in time and resources from operators.
Google or Facebook accounts simply cannot securely hold the identity information required to safely onboard new customers to financial apps. But perhaps distributed ledger technology can.
Here, we are going to explore how blockchain technology and digital identities can be used to speed up the KYC and AML process, make onboarding faster and easier for customers, and most importantly, we will discover how blockchain can make the storage of a user’s identity credentials safer.
We will also be discovering Cardano’s first blockchain-based identity solution from IOHK — Atala PRISM— and what role this will play within the wider Cardano ecosystem.
Existing identity management solutions
There are already a couple of options available for those looking for a more integrated identity management solution. Password managers, for example, are ubiquitous applications which store all of a user’s login credentials in a single encrypted location.
Password managers usually provide a browser-based plugin, such as a Chrome extension, which automatically fills username and password fields without the user having to manually enter their details...
This article was first published on medium.com.
Written by Cardano Foundation.