The solution is underpinned by the technology that facilitates bitcoin and other crypto-currency transactions.

Three Asian banks and a Singaporean regulator have reportedly developed a prototype for a know-your-customer (KYC) solution underpinned by blockchain, a technology slated as potentially revolutionising traditional onboarding processes. 

OCBC Bank, HSBC and Mitsubishi UFJ Financial Group (MUFG), along with the Infocomm Media Development Authority, claim to be the first consortium in Southeast Asia to have built a blockchain-powered system to identify and verify clients' credentials, according to media reports. 

KYC checks are carried out by all banks separately, placing the onus on each individual firm to guarantee clients and their funds are kosher. However, the process can often take weeks - even months - as it is laden with paperwork, with banks' time and resources being spent validating physical documentation.

But blockchain could harness the power to change this. 

A blockchain is a virtual distributed ledger of transactions shared peer-to-peer that can record ownership across a public network of computers rendered tamper-proof by advanced cryptography. 

Because all data inputted into a blockchain is shared with all parties connected to it simultaneously and in real time, the technology inherently has the potential to streamline KYC processes as it self-audits any information that is recorded, accessed and shared.

And this concept, or something similar, is likely what the firms' prototype is aiming to test.

Some theorists have suggested that in the future, once a client's relevant information has been validated and stored on a blockchain, this blockchain could then be shared with any institution requiring KYC checks, making it a so-called “single source of truth”. To read an feature discussing this concept, click here.