Government believes blockchain could boost finance sector competition

The federal government has released its National Blockchain Roadmap

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The federal government says that blockchain technology may provide an opportunity to reduce costs and increase efficiencies in the financial services sector, as well as enhance the competitiveness of new market players and support higher rates of consumer switching.

In its recently published National Blockchain Roadmap, it noted a low rate of retail customers switching providers as a result of customer due diligence (CDD) processes.

Regulated businesses are required to identify and verify their customers’ identity; provide reports to AUSTRAC about financial transactions; and implement systems and controls to identify, mitigate and manage the risk that their business will be exploited for money laundering, terrorism financing, or other serious financial crimes.

Compliance with CDD requirements entails costs for financial service providers when taking on new customers and often results in disincentives for consumers to switch due to the time and effort required.

The roadmap suggests blockchain could be used to facilitate the CDD process by securing the information and allowing for it to be shared between institutions when a customer wishes to switch, rather than go through the entire process again.

"Blockchain could be an effective solution to support the sharing of KYC [know your customer] information — allowing the results of KYC checks to be transmitted securely, at speed and with the highest level of confidence," the document stated.

Blockchain could help minimise duplicating KYC processes, as well as offer an opportunity to simplify record keeping and remove unnecessary manual efforts.

"Combined with the Consumer Data Right that the Australian Government is implementing, there is potential for the process of switching banks to become as simple as a single click, where — subject to robust privacy restrictions pertaining to the use of their data — a consumer may consent to the transfer of their transaction data and their identity verification, together, from one financial service provider to another, subject to the receiving provider choosing to accept and rely on that information," the roadmap states.

The document also addresses the nation's skills base, which the roadmap noted will affect the success of failure of blockchain in the country.

"There is a need to build the skills-base that can translate into the capability that drives innovation and helps blockchain reach its potential," stated the document.

According to the roadmap, the skills of technology investment decision-makers, in both public and private sectors, also need attention. 

"Given Australia has around 470,000 people with potentially relevant digital and ICT skills, an opportunity exists for Australia to develop a solid cohort of blockchain-proficient professionals — provided the appropriate blockchain-specific training is made available,” it states.

"Australia is already developing the means to address this need, with a number of Australian universities taking the lead in developing modules and courses which specialise in blockchain. A number of online courses, including courses offered by established universities, are also currently available."

Some of the courses mentioned include the short university course on blockchain strategy launched in March 2018 by the Royal Melbourne Institute of Technology (RMIT).

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