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UnBlocking Southeast Asia with Blockchain
“KP, can Ashnik help us in building a Blockchain prototype for our KYC (Know Your Customer) application?” asked a Senior Executive driving the Blockchain initiative with a consortium of banks in Indonesia. He continued “We are seriously looking into a possibility of using Single KYC application network using Blockchain, so that all the participating organisations can leverage it, reducing large overheads while dramatically improving customer experience”.
I recollected my own experience 2 years back, running from one financial institution to the other completing the KYC procedure, spending valuable time, away from my family commitments. This is not only frustrating at an individual customer level, but in order to comply with KYC, banks and other financial institutions must dedicate a huge amount of resources, while potentially duplicating the efforts which other bank or financial institutions might have already undertaken.
A Thomson Reuters survey found that Financial Institutions are spending an average of $60 million per year on compliance with KYC. These regulations also massively impact the customer experience as onboarding new customers can take an excessive amount of time in excess of 4 months on an average. With Blockchain based distributed open ledger system, there is a potential to simplify the whole process and complete KYC for every customer across all financial institutions in just one application in highly secured way. In Singapore, OCBC Bank, HSBC and Mitsubishi UFJ Financial Group (MUFG), along with the Infocomm Media Development Authority (IMDA), have become the first consortium in Southeast Asia to develop a prototype for a KYC Blockchain.
In fact, Blockchain can benefit the region immensely by creating truly transparent democratised systems and equal opportunities for all. Today, only 27% of Southeast Asia’s 600 million population have bank accounts. Since the 2008 crash, trust in financial institutions worldwide has decreased. In this region, where trust was already lacking, this decrease challenged the region’s ability to capitalize on its potential. Blockchain provides the opportunity for a true, global sharing economy, where autonomy, financial freedom and financial inclusion will be accessible to all.
Imagine a world that does not need to rely upon a central entity, is free from unexpected fees, regulations, and barriers to entry such as having the legal documents to open a bank account. As corruption continues to plague much of this region, the decentralised, transparent, and secure Blockchain transactions will empower individuals by eliminating the need to deal with corrupt institutions. Government election processes can become much more effective and transparent, making it easier to run a truly non corrupt democratic country. If each citizen has their own unique cryptographic signature, it would make the voting process anonymous yet verifiable. Paper transactions can be eliminated, creating more transparency between two parties and reducing any need for a centralized system. The creation of “Smart Contracts” can lead to real accountability amongst every contractor and supplier since each transaction is permanent and public. It would be impossible to destroy any trail of evidence as each public record is available for inspection. Blockchain is moving very quickly in trade finance where cross border import and export becomes faster, cheaper and more transparent combined with reductions in the risks of lending and borrowing.
Today many countries, their policy makers and organisations across South East Asia are getting on board foreseeing the power of decentralized ledger-based systems. Prudential Singapore (Prudential) and StarHub have partnered to launch Fasttrack Trade (FTT) – a digital trade platform for Small and Medium-sized Enterprises (SMEs) using Blockchain technology. Thailand Post, the country’s state-owned postal service, announced it would begin using Blockchain technology to track high-value parcel deliveries, for expensive and luxury items by early 2018. The Philippine government believes that Blockchain can provide a solution to the problem where only 17 percent of the country has limited or no access to electricity. A micro-grid platform based on Blockchain that lets local providers share and sell excess power to one another on a peer-to-peer basis – with all transactions logged on decentralized ledgers is in discussion. In Vietnam, the country’s Infinity Blockchain Labs has entered into talks with a group of leading Vietnamese banks with the aim of making the country’s financial institutions world leaders in Blockchain use. And in Cambodia, the central bank is about to begin a pilot scheme that could eventually see it adopt Blockchain technology for a range of financial services, possible involving local currency.
I believe every country in South East Asia understands that the country which will lead the way in producing low-corruption, high-transparency, highly-secure digitized economic infrastructures by adopting Blockchain technologies will attract business, investment and stakeholder confidence. The race is on to unblock the Blockchain and pave way for financial democracy.
Kaustubh Patwardhan, Director – ASEAN and Hong Kong, Ashnik – Singapore
Kaustubh (KP) is the Director – ASEAN and Hong Kong, Ashnik. His role comprises of heading Strategic Partnerships, Channels Management and Business Development for ASEAN. With his expansive experience in IT, he plays a pivotal role in strategic initiatives undertaken by Ashnik. Apart from his usual responsibilities at Ashnik, he is passionate about photography, cricket and other sports. He is also an enthusiastic participant in poetic circles and plays.