The Euro Banking Association (EBA) is looking at how cryptotechnologies can help financial institutions improve regulatory compliance.
In a new report, EBA’s Cryptotechnologies Working Group is exploring how cryptotechnology-based RegTech solutions could be ‘particularly attractive’ for KYC data management and regulatory reporting.
Improving efficiencies, RegTech solutions could lower costs and ultimately help financial institutions to stay competitive in the digital economy. Current KYC processes are often fragmented and redundant, leaving financial institutions with higher costs and dissatisfied customers according to the report.
“DLT-based data sharing within a financial institution has the potential to improve data integration and error rates. If each department has a shared, uniform view of KYC attributes, customers will no longer have to re-submit KYC documentation for each additional service. DLT-based data sharing could even be extended to include multiple financial institutions,” said José Vicente, deputy manager in the payments and acquiring division (Payments Systems and WU Unit) at Banco Comercial Português and Chair of the EBA Cryptotechnologies Working Group.
The EBA working group concluded that cryptotechnology-based RegTech has the potential to help financial institutions set up the modern compliance processes that are needed to meet regulatory requirements without taking resources from revenue generating activities. Collaboration between financial institutions and the dialogue with regulators will be key to enabling secure and efficient DLT-based solutions.
DLT-based reporting systems could be of considerable value as well, Vicente added. “Financial institutions are subject to multiple reporting requirements to various authorities at various frequencies. DLT-based reporting systems can be designed to be compliant with regulation from the outset and help make these reporting processes more efficient and fault-proof for the benefit of both financial institutions and regulatory authorities.”
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