Japan’s financial regulator the Financial Services Agency (FSA) and various financial institutions are developing a common identification system leveraging blockchain technology to facilitate customer onboarding.
The system will first be rolled out at the country’s three largest banks first, namely the Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp., and Mizuho Bank. An administrative body for the new system will also be established, according to a Nikkei report.
The FSA plans to begin testing of the new system next month. The trial will extend to next spring and will determine the risk for data leaks or other issues.
The system will allow customers to open accounts at multiple banks and financial institutions without having to re-enter personal information. More precisely, an account holder at one bank will be able to register for a shared ID. When opening an account at another bank, he or she will only need to provide the common ID through a smartphone app and confirm his and her identity through fingerprint or facial scan. Regardless, customers will still need to verify their identity via mail.
Personal data will be stored on a blockchain. These records will be accessible by authorities to investigate identity theft or suspect transactions.
Dai Nippon Printing will develop equipment that immediately dispenses cash cards once the account holder is verified. The process will involve facial recognition and scans of chips embedded in driver licenses and other identification cards.
The shared ID system is one of the many blockchain projects that are being developed and tested in Japan.
SBI Ripple Asia, a joint-venture between SBI and Ripple established in early 2016, is set to begin testing a funds-transfer system between Japanese and South Korean banks by the end of fiscal 2017.
SBI Ripple Asia leads a group of Japanese banks that are experimenting with Ripple’s distributed ledger technology.
This week, a consortium of banks led by Mizuho Financial Group and Japan Post Bank, won support from the country’s central bank to launch the J-Coin, an electronic currency to pay for goods and transfer money using smartphones.
Whether J-Coin will utilize blockchain technology like Mitsubishi UFJ Financial Group’s MUFG Coin is unknown.