Islamabad, Pakistan, Tuesday, January 9, 2024– Pakistan recently adopted a blockchain-based Know Your Customer (KYC) platform for its financial institutions, a move aimed at enhancing efficiency and security, news reports said.
Developed by Avanza Group in collaboration with the Pakistan Banks’ Association (PBA), the platform, known as “Consonance,” offers advantages over traditional KYC methods.
Consonance allows secure sharing of information across institutions on the blockchain, eliminating the need for repetitive KYC procedures and saving time and resources.
The platform ensures data integrity through blockchain’s security features, minimizing the risk of fraud and errors. Standardized data formats and validation protocols contribute to more accurate and consistent KYC information.
Smaller financial institutions can benefit from shared KYC infrastructure, potentially opening doors for underserved segments of the population.
The State Bank of Pakistan (SBP) encourages all banks to join the Consonance platform, recognizing its potential to streamline KYC processes and strengthen anti-money laundering (AML) and counter-terrorism financing (CFT) controls.
This initiative aligns with the SBP’s vision for a “paperless, efficient, and inclusive financial system” outlined in its recent digital strategy.
Blockchain adoption for KYC in Pakistan could serve as a model for other emerging economies looking to leverage digital technologies for financial inclusion and enhanced security.
However, challenges remain, including ensuring robust cybersecurity protocols and addressing potential regulatory hurdles. The success of this transformative depends on the effective implementation and sustained participation of financial institutions, determining its long-term impact, analysts believe.
