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Designing a Framework for Digital KYC Processes Built on Blockchain-Based Self-Sovereign Identity

Author

Listed:
  • Vincent Schlatt
  • Johannes Sedlmeir
  • Simon Feulner
  • Nils Urbach

Abstract

Know your customer (KYC) processes place a great burden on banks, because they are costly, inefficient, and inconvenient for customers. While blockchain technology is often mentioned as a potential solution, it is not clear how to use the technology's advantages without violating data protection regulations and customer privacy. We demonstrate how blockchain-based self-sovereign identity (SSI) can solve the challenges of KYC. We follow a rigorous design science research approach to create a framework that utilizes SSI in the KYC process, deriving nascent design principles that theorize on blockchain's role for SSI.

Suggested Citation

  • Vincent Schlatt & Johannes Sedlmeir & Simon Feulner & Nils Urbach, 2021. "Designing a Framework for Digital KYC Processes Built on Blockchain-Based Self-Sovereign Identity," Papers 2112.01237, arXiv.org.
    • Handle: RePEc:arx:papers:2112.01237
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    References listed on IDEAS

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    1. Arner, Douglas W & Barberis, Janos & Buckley, Ross P, 2016. "The Emergence of RegTech 2.0: From Know Your Customer to Know Your Data," Journal of Financial Transformation, Capco Institute, vol. 44, pages 79-86.
    2. José Parra Moyano & Omri Ross, 2017. "KYC Optimization Using Distributed Ledger Technology," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 59(6), pages 411-423, December.
    3. Johannes Sedlmeir & Reilly Smethurst & Alexander Rieger & Gilbert Fridgen, 2021. "Digital Identities and Verifiable Credentials," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 63(5), pages 603-613, October.
    4. Robert Arasa, 2015. "Determinants of Know Your Customer (KYC) Compliance among Commercial Banks in Kenya," Journal of Economics and Behavioral Studies, AMH International, vol. 7(2), pages 162-175.
    5. Roman Beck & Sven Weber & Robert Wayne Gregory, 2013. "Theory-generating design science research," Information Systems Frontiers, Springer, vol. 15(4), pages 637-651, September.
    6. Jessel, Benjamin & Lowmaster, Kaelyn & Hughes, Neil, 2018. "Digital identity: The foundation for trusted transactions in financial services," Journal of Financial Transformation, Capco Institute, vol. 47, pages 143-150.
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