Dubai KYC consortium to enhance UAE bank profits
According to Moody’s Investors Service, the recently formed Know Your Customer (KYC) consortium is a significant development for the United Arab Emirates (UAE) banks. They believe Blockchain-powered technologies will facilitate a swift and secure transfer of authentic customer data and documents which will establish enhanced compliance with global KYC regulations and minimize the risk of identity theft.
The National also referred to this in their tweet:
Dubai’s KYC blockchain platform is credit positive for UAE banks, Moody’s says https://t.co/vJNHyuLVUw
— The National (@TheNationalUAE) February 26, 2020
Additional qualified financial institutions and licensing authorities will be able to join the KYC platform once it opens up this quarter. Dubai Economy, Emirates NBD, Emirates Islamic, HSBC, RAKBANK, Abu Dhabi Commercial Bank and Commercial Bank of Dubai will be among the key members of the consortium.
According to the Assistant Vice President of Moody’s, Mik Kabeya, the creation of this consortium is credit positive for UAE banks and it supports asset quality and profitability. Moody’s believes that non-compliance with KYC regulations, especially for anti-money laundering and terrorist financing, can have legal implications and result in huge sanctions for banks. The reputation of financial institutions can also be damaged significantly.
In addition, miscalculation of banks’ collection and mismanagement of KYC data will also be prevented through the platform. The future vision for the consortium-run ecosystem is to serve the greater good by refining the ease of conducting business as well as overall regulatory compliance in the United Arab Emirates. The consortium’s operations will be monitored by Smart Dubai and the UAE Central Bank.
Kabeya expects that the platform will assist in credit risk management due to the availability of improved data for client underwriting and debt collection. He stated,
“The consortium will support the franchises and profitability of UAE banks by improving customer service through shorter turnaround times for customer onboarding, including opening a bank account.”
Furthermore, it is believed that the financial cost of paper-based KYC data acquisition will also be reduced.