Independent Banker - October 2018 - 60

biographic data, such as name, age, gender and address,
and biometric data, such as fingerprints, iris scans and
handprints, to form the digital identity of the customer on
the blockchain that can be interpolated across different
parts of the organization or across different organizations, "
Lim says. " Smart contracts on the blockchain can
also automatically generate regulatory reports on
banking transactions. "
A chip off the old blockchain?
SAS has worked with community banks (and larger
financial institutions) on a number of regulatory fronts.
Penfield believes " blockchain technologies will
be very disruptive from many business
process perspectives, information
access, technology knowledge and
implementation. Eventually, there may
be multiple disparate blockchains that
will need to work together in inter- and
intra-bank environments [so that]
analytics [can] be utilized to track
operational and business data. "
Indeed, Strasser points out that blockchain could
specifically meet the need of helping community banks
develop better risk-rating systems within their existing
AML systems, so that institutions like River Valley Bank
could create individualized checklists based on each
customer for customer identification programs or KYC
protocols. " KYC/AML blockchain data files could be
used for marketing opportunities to existing customers, "
Strasser says. " Or by sales people out in the field for selling
products and services that would enhance their business
and their life. "
Under section 314(b) of the U.S. Department of the
Treasury's Financial Crimes Enforcement Network
(FinCEN), financial institutions are permitted and
encouraged to share information with the Treasury
Department and other financial institutions on potential
money laundering and terrorist financial acts (as part of
the USA Patriot Act). " A blockchain file would make this
sharing quicker and more accurate, " Strasser says.
Blockchain could also serve a purpose in helping banks
manage their Bank Secrecy Act (BSA) requirements,
since the distributed ledger could allow banks to share
A true industry game-changer
T
he phrase " disruptive
technology " gets tossed
around a lot these days. It's a way
to describe emerging technologies
that could change the way that
businesses operate internally
and with their customers. But
blockchain may actually be living up
to the hype.
In financial services, as in other
industries, blockchain technology
has been promised to offer better
efficiency, transparency and
security. Banks and their vendors
have taken note and are cautiously
optimistic in their testing and trials
of this technology. In an interview
with Pymnts.com in June 2018,
Esther Pigg, senior vice president
for FIS product strategy, discussed
numerous internal proofs-ofconcept
and pilots that the
banking service provider has been
working on.
Overseas, blockchain has
been used in the Republic of
Georgia to develop a land
ownership registry to
verify ownership of
property. In a similar way,
U.S. banks could close
real estate loans more
60 Q ICBA Independent Banker Q October 2018
quickly, and real estate holdings
could be verified immediately and
with certainty. The role of the title
agent would be minimized, as the
time taken to verify title would be
eliminated. More importantly, the
cost associated with confirming a
title interest through title insurance
would be dramatically reduced.
All of these results would
improve the closing
process both from an
efficiency standpoint
for banks and from a
cost standpoint for
the customer.
http://www.Pymnts.com
Independent Banker - October 2018

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