Leveraging Blockchain Technology for Optimized Identity Verification

A passionate startup enthusiast, active angel investor and mentor, Nibras is an impact-driven technology professional with over 12 years of experience across diverse functions of engineering and product development.

In a recent conversation with Prisila (Correspondent, Asia Business Outlook Magazine), Nibras shared her valuable insights on blockchain technology and how it is facilitating identity management, especially in the finance sector. Below are the selected extracts from the exclusive interview -

How is blockchain technology enabling businesses to reduce costs associated with their identity verification process?

While blockchain technology facilitates automation and enhances the overall process efficiency, it also enables the creation of smart contracts that are self-executing and comprise terms of agreement directed into them. These contracts also help companies cut down a lot of intermediate and manual interventions, which will in turn enhance the efficiency of the process and significantly reduce overall costs. In terms of identity verification, blockchain technology can promote interoperability and standardization of identity across various mediums. For instance, once a person's identity is verified on his/her blockchain wallet, banks or any other institutions don't have to do a KYC again and can just ask them for permission to confirm their identity over the blockchain. Since blockchain technology is tamper-proof, this process is also completely secure and trustworthy. 

Briefly explain how blockchain technology is sparing companies from the hassles of data management.

A key area in which blockchain technology helps companies immensely is in the storage and management of data. Traditional identity verification systems involve maintaining and managing databases across different entities, especially if you are a big conglomerate. Blockchain completely eliminates the need for maintaining data, thus sparing the organization a significant chunk of workforce and capital. Additionally, blockchain also simplifies cross-border transactions while simultaneously ensuring that they are secure as well.

What is the role of blockchain-based identity verification in ensuring compliance with various regulatory policies and frameworks?

Since blockchain facilitates automatic identity verification and tamper-proof logging of every transaction, it enables regulatory authorities and auditors to check the details of any transaction easily. Also, blockchain ensures complete security and privacy of user data, which is among the most stringent and mandatory requirements in terms of financial transactions worldwide. Additionally, blockchain reduces the chances of unnecessary personal identity data being shared and takes care of identity verification with minimal binary responses. For instance, if a person is visiting a website that requires verification of the user's age, he/she can just provide access to the blockchain platform where his identity is verified instead of providing his/her birth certificate. Most importantly, given the constant rate at which regulatory changes are happening in recent times, blockchain facilitates hassle-free updation of new frameworks and policies without compromising the security of its logs.

How are blockchain-based identity frameworks enhancing the trustworthiness of decentralized finance (DeFi) platforms?

While blockchain technology does have a large number of use cases across various industries, one industry that has seen massive disruption due to its implementation is banking and finance. Given the sensitive nature of how the BFSI sector functions, it is paramount the organizations to ensure that users' transactions remain secure and keep a log of every transaction that has been done via their platform. The fundamental foundation on which blockchain technology is developed is trust, privacy, and security, wherein any transactions that are happening on the blockchain network are significantly more secure. Their records are automatically logged and cannot be tampered with. As a result, blockchain facilitates organizations to maintain complete transparency in terms of transaction data while simultaneously ensuring that the user data remains secure.