What is a ‘Blockchain’? This question came in response to my comments, during a recent conference, that Blockchain could become a significant disruptive force for credit information companies. Needless to say I was stunned, but the question demonstrates a degree of ignorance about this matter, notwithstanding the undercurrent of concerns in the financial services sector.
Not long after this incident I was happy to note that BIIA member Forrester picked up on this topic with a report “What the Heck is Blockchain” which we covered on BIIA.com. In the meantime a number of BIIA members have gone public on this important subject:
Thomson Reuters is taking this matter very seriously. It is participating in many conferences and is the only content company, which has joined the R3 banking consortium on Blockchain. It has also revealed it will soon launch an identity verification platform for ethereum smart contract developers.
A critical element of identity verification is the Thomson Reuters Permanent Identifier or PermID. This is a machine readable, 64 bit number used to create a unique reference —which will never change over time — to a piece of information. The PermID helps customers and partners handle data management challenges, eliminate mapping inconsistencies, reduce operational risk, and streamline end-to-end workflow processes across various platforms.
Thomson Reuters has been using the PermID company-wide to improve internal data federation. It is making a subset of PermIDs available customers through an open license. This provides significant and no-cost access to available Thomson Reuters-linked data. In addition to the PermID, Thomson Reuters provides an openly available, though limited, set of descriptive metadata and tools for working with PermID.
Dun & Bradstreet: Using a Blockchain ledger to vet trading partners and others in the ‘financial supply chain’ would make transactions more secure and faster, Dun & Bradstreet said in an interview with the Wall Street Journal. Dun & Bradstreet Corp. is testing a Blockchain Distributed Ledger for offering its proprietary corporate data to business customers. The data and analytics company plans to launch a service for vetting partners and conducting transactions in trade finance, built on the open-source Ethereum Blockchain platform.
In regard to identification and reputation Dun & Bradstreet expands the Value of the D-U-N-S ® Number through Blockchain Technology. It has willingly embraced this new technology and intends to provide its customers with identity and reputation solutions that are trustworthy, secure, and efficient. D&B’s aim is to continue to help our customers grow their most valuable relationships through data. Potential benefits of Blockchain technology include accuracy, timeliness, and security. To achieve these ends on a Distributed Ledger platform, counterparties must be identified and validated, and their reputations vetted:
D&B use case I: D-U-N-S ® Number to Blockchain ID Mapping. For Blockchain providers there will be no need to create duplicate identifiers each and every time a new counterparty is added to their network.
D&B use case II: Compliance. Many commercial Blockchain platforms will require compliance with screening requirements in government regulations. Entities will need to be fully identified and vetted before gaining admission to the platform. In addition to D&B’s identity and reputation capabilities, D&B’s KYC and Compliance solutions can be integrated with any Blockchain platform to comply with regulations, reduce risk, and make a more informed decision.
D&B use case III: In the trade finance sector much attention is being paid to distributed ledgers, as banks, importers, and exporters seek to reduce risk associated with the shipping of goods across international waters. Since an estimated 80-90% of world trade relies on trade finance, technological advancements could have an outsize impact in this market. Moving trade finance processes to a distributed ledger can streamline the management of documentation and contract execution to one central location accessible to all involved parties.
Bisnode and Coinfirm have entered a partnership to take Compliance and Business Intelligence to the next level with Blockchain according to a recent announcement. Bisnode and Coinfirm’s services are going to help change this reality with Coinfirm’s platform delivering clear actionable insights like risk ratings and recommendations that streamlines compliance and significantly reduces costs and risk around blockchain transactions.
Kompany.com: A relative newcomer to the industry is kompany.com which is moving register data on 100 million Companies onto the Blockchain for KYC/KYB. Kompany.com made the announcement at the European Commerce Registers’ Forum (ECRF) and Corporate Registers’ Forum (CRF) in Cardiff this year.
The Legal Entity Identifier (LEI): Not to be left out in the identification game is the LEI. The Legal Entity Identifier (LEI) is a unique ID associated with a single corporate entity. The Legal Entity Identifier was initiated by the Financial Stability Board to improve transparency in financial transactions. It was created without the involvement of the business information industry, which had for decades developed neutral identifiers for businesses. BIIA has dedicated a special section for the LEI in its portal.
According to the latest thinking, the LEI organization is looking at two scenarios of Use Cases: Use Case 1: Using identity labels in Blockchain / distributive ledger applications, for example in a distributive ledger systems for trading financial instruments: In essence becoming the defacto standard due to legal and regulatory requirements. Use Case 2: Using Blockchain / disruptive ledger for creating and managing identity labels (unique key): For example: Using Blockchain / distributive ledger for managing the LEI creation and administration itself. In essence a long-term research project, with many open questions, but with interesting aspects for the evolution of the LEI system.
What does the future hold? As we (BIIA) see it, at first there will be many proprietary Blockchain systems coming on stream, which will use a variety of private sector identifiers, or combination thereof. In the end transaction driven updating of company records (who is trading with whom) may be ahead of public sector data which is a primary source for the LEI. Most importantly, the LEI is an identifier, but it does not provide the utility for vetting trading partners, such as Thomson’s PermID and Dun & Bradstreet’s D-U-N-S®Number.
Who will win: Market driven identifiers or public sector identifiers? Blockchain is heralded to become a disrupter of central authorities. Public registers are central authorities whose authority will be challenged by Blockchain technology. Unless the regulator steps in it will hopefully become a game changer for the benefit of market driven identity systems.