Blockchain usecases from Financial Services & Government/Legal/Regulatory

This blog represents some of the Blockchain uses cases in industry domain related with financial services and Government/Legal/Regulatory. The blockchain is getting talked about/implemented in different industry domains such as following:

• Financial services
• Government / legal / regulatory
• Government / legal / identity management
• Capital markets
• Healthcare / medical
• IOT
• Publishing
• Supply chain / Logistics
• Supply chain / Traceability / Anti-counterfeiting
• Supply chain / Interoperability / Visibility
• Travel / Hospitality
• Agriculture

I shall be doing a blog series discussing all of the above use cases in detail. In this blog, we will look into some of the use cases in financial services and Government/legal/regulatory.

Financial Services

• Microlending: Small unsecured loans issued by individuals or microfinance institutions (MFIs) rather than banks.
• Financial Reference Data: Keep a track of interaction between thousands of firms (entities) and individuals in relation with wide range of financial assets (equity, fixed income, currencies, commodities) through various intermediaries (exchange, broker, custodian, multilateral trading facility).
• Interbank payments: Track hundreds of thousands of interbank payments happening between various financial institutions on behalf of their clients. This will most likely be permissioned blockchain with authorized members; Hyperledger would work to be a great choice to manage interbank payments as one can use Channels feature to enable private blockchains as well.
• Escrow: Track some of the following in relation to escrow payment verification:
  • Sale agreement/contract
  • Clearing of contingencies to sale
  • Certificate of ownership/title search
  • Good faith estimates for closing costs
  • Proof of transfer of funds from buyer/mortgage lender to an escrow account
  • Proof of purchase and transfer of title

  This can be permissioned blockchain.

Government / Legal / Regulatory

• ID/Birth/Death certificates: It is possible to store and track the citizen ID numbers such as (Aadhar number/SSN etc), Birth/Death certificates on Blockchain. This can be public Blockchain with controlled access as appropriate.
• Property Ownership: Blockchain can be used to track/trace the ownership of properties of different types such as cars, planes, yachts etc. Most importantly, it authenticates the validity of property owner, thereby, confirming the ownership of the asset. This would help in providing proof of ownership to some of the following:
  • Potetial buyers
  • Legal disputes
  • Insurance companies
  • Law enforcements
• Charity: Blockchain can help in some of the following manners to enhance the charity/philanthropy:
  • Provides new opportunities (types of assets) for donors to donate
  • Provides new ways for charities to raise funds for their existing work
  • Enhances the trust and transparency on donor part in terms of providing traceability and transparency in the financial transactions or the execution of contractual terms. Smart contracts would prove to be very helpful in this relation.
  • Reduced (or zero) cost of transactions
  • Smart contracts leading to donations to be made on the basis of fulfillment of pre-defined criteria.
    One can go through greater details on this page, How the Blockchain will Revolutionize the Charitable Giving. Once can also read a comprehensive report such as Giving Unchained – Philanthropy and the Blockchain
• KYC Database: Blockchain can help managing KYC in some of the following manners:
  • If a customer completes a KYC process with an entity, that information/transaction becomes a part of a block which is then added to blockchain and shared with other related entities.
  • It is no more required for every bank and financial institution to perform the KYC process individually and upload the validated information and documents to their central registry that stores digitized data tagged to a unique identification number for their customers. A blockchain-based registry (KYC ledger) could remove the duplication of effort in carrying out KYC checks. From security perspectives, the ledger would enable encrypted updates to client details. These updates would then be distributed to all concerned entities in near real-time. The KYC ledger could also be used to provide a historical record of all documents shared and compliance activities undertaken for each client/customer.
    The related reads/details can be found in one of the following pages:
    • Blockchain – A blessing for KYC and AML?
    • Blockchain and Identity: Revolutionising KYC for financial institutions
      KYC Ledger can be implemented using permissioned blockchain frameworks such as Hyperledger, R Corda