Interoperable APIs to help fuel financial inclusion, not blockchain

By David Beach | 6 December 2018

Since its inception, it has been a core tenet of a decentralised blockchain to bring citizens from developing countries into the global financial system and the greatest advocates continue to push the same message, arguing that an immutable ledger of proof would stamp out fraud, and serve as an ultimate record of global identity verification.

The theory goes that access to crypto economies and an immutable public ledger of record of deeds and titles, provides citizens of developing countries with a degree of immunity to local economic crises or land grabs, at least according to a bitcoin miner who spoke to bobsguide in the cryptocurrency’s heyday.

In 2018, the blockchain and crypto buzzwords morphed into distributed ledger technology as the financial services swiftly dispelled the virtues of a public and decentralised ledger.   

“Using the blockchain to comply with Know Your Customer (KYC) regulations presents a crucial problem: People don’t want private information on a public ledger,” says head of growth at Trulioo, Anatoly Kvitnitsky, on the subject of using the decentralised record to give the unbanked access to credit and finance.

But Kvitnitsky believes the dark horse technology that can enable financial inclusion is grounded in the emergence of an API ecosystem around financial access — an ecosystem that could create an impact that is real, immediate and, more crucially, one that wins the confidence of regulators.

“With the API approach, banks, payment service providers, eCommerce and money transfer companies no longer have to struggle to cobble together disparate data sources that vary country by country. Instead, they can use Trulioo to access over 400 data identity sources across the world in order to comply with KYC and Anti-Money Laundering (AML) rules,” says Kvitnitsky.   

Trulioo’s approach differs markedly from blockchain in that it does not store data; instead, “Data belongs with the individual, and the respective companies that are trying to verify the individual’s identity,” says Kvitnitsky.

According to Kvitnitsky, Trulioo’s ability to securely connect its clients to a multiplicity of identity data sources raises the degree of trust with which organizations onboard customers. “For example, if a company is trying to verify the identity of a customer in the UK, Trulioo can provide it with secure access to a dozen identity data sources. Having a plethora of identity data sources helps because if a customer’s details don’t check out with one data source, you can always cross-reference the customer’s identity data with the other 11 established and reputable data sources. This multiplies the trust factor,” he says.   

But this multiplier effect on trust is a luxury of the developed world, and a reason that Trulioo focuses on the long tail countries.

“In the US and UK, identity verification was solved 20 years ago. The big credit bureaus have been around for a long time, and are trusted. In APAC, however, these data sources are not as prevalent; for example, in India, credit bureaus have only been around for five years; Africa, too, is trying to catch up,” says Kvitnitsky.

And the size of the task is certainly significant. According to the International Monetary Fund, only 13% of Indian adults borrow through formal channels, out of a population of 1.3bn.

“If a company is looking to expand their services into a country where conventional sources of identity data aren’t particularly robust, they would have to procure a variety of identity data sources in order to conduct customer due diligence — a long and taxing process fraught with delays and red tape; but Trulioo, on the other hand, has already done the hard work and offers organizations secure access to hundreds of reliable and unique data sources for identity verification through a single API integration,” says Kvitnitsky. 

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