Knabu To Pilot Bank Regulatory Reporting With Factom Blockchain
Crypto startup Knabu is working towards piloting bank regulatory reporting with Factom. Factom is among the first enterprise blockchain companies.
Reportedly, the launch of the 30-day pilot of the London-based firm was on the 31st of October.
Knabu is a payments company with a smart-deposit product meant to help companies mitigate the risks of self-custody assets on a blockchain. It has plans to establish itself as a bank, and therefore, it is applying for a UK banking license. The goal of the company that would turn into a bank is to get recognized as a bank that can serve crypto and blockchain firms generally excluded from traditional banking services.
“The purpose of the pilot is to start proving some of the efficiencies that blockchain brings – specifically as the core infrastructure for a bank,” Gabrielle Patrick, founder, and CEO of Knabu, said. He further added:
“The average cost of regulatory compliance for a bank is about 30 percent of its budget. … We’re a blockchain-first company and felt that it was necessary to demonstrate the features that can remodel that.”
Compliance costs for banks are on the higher side, and this is because of the repetition of the numerous manual processes. Knabu will run know-your-customer (KYC), know-your-business (KYB), and anti-money laundering (AML) checks on customers to encrypt the data, and deliver the said data to Factom which will record it on the ethereum and bitcoin blockchains.
The co-founder of Knabu Hakim Mamoni, who is also the chief technology officer, said, “We wanted to avoid repeating the same KYC, KYB, and AML checks. [Traditional banks] don’t have the same flexibility in terms of having access to the data.”
The customer pilot participant that Knabu would name is crypto trading platform EthBits, and it is the only one to be named. IdentityMind will perform Knabu’s KYC and KYB checks; on the other hand, DMG Blockchain will use blockchain forensic tools like Blackseer and Walletscore to carry out AML due diligence on customer bitcoin and ethereum wallets.
The Factom blockchain’s job is to build data chains and then later preserve them on the ethereum and bitcoin blockchains with the help of Merkle root. Factom’s services are made available to the customers via factoid tokens. The Factom services offered are run wholly by Factom with Knabu pushing data to the firm using an application programming interface (API).
“This allows us to be able to borrow the security that you get from the power of the bitcoin and ethereum blockchains to verify that your data is what you claim it to be,” Carl DiClementi, vice president of product at Factom said.
Knabu CEO Patrick says the pilot is in accordance with working from the UK’s Financial Conduct Authority. They are going through potential ways and ideas that would help with the digitalization of regulatory reporting by financial institutions.
Knabu even is getting around the idea of testing reporting capital reserves on Factom’s blockchain soon.
Patrick mentioned, “The goal is to rip out any inefficiency and to serve underserved businesses,” further adding, “Many sectors are underserved because the cost is too high.”