July 12, 2024

As per Moody’s statement, Dubai’s KYC blockchain platform is a credit positive for UAE banks


The latest initiative will drive and support the Banking asset quality and also as well as improve its profitability.

According to Moody’s investor service “A union of Six Banks as well as the licensing authorities in the UAE, that was formed during February for sharing the verified data about the consumers utilizing the blockchain technology, is a credit positive for the lenders in the region.”

The rating agency also stated that “they expect the KYC [know your customer] blockchain consortium to support the asset quality of UAE banks primarily by allowing to curb the operational risk.” It also additionally noted that “This latest platform will facilitate a much swifter and more secure on-boarding, and exchange of authenticated and validated digital consumer data pool and documents through distributed technologies powered by blockchain. This will thus, ensure better compliance with native and global KYC regulations while reducing the risk of data theft.”

As per the Moody’s and as of June 2019, the Six Banks in the Union includes Emirates NBD, Emirates Islamic (the Sharia-compliant subsidiary of Emirates NBD), HSBC Bank Middle East, The National Bank of Ras Al Khaimah, Abu Dhabi Commercial Bank and Commercial Bank of Dubai, that holds 44 percent of overall banking assets in the UAE.

The Moody’s stated that “blockchain platform will be boosting the compliance and the law and regulatory framework of lenders as a non-compliance with KYC regulations, particularly regarding the anti-money laundering and terrorist financing, can have material legal implications and result in a sizeable penalty for banks.”

The Moody’s also stated that “this blockchain platform will support the regulatory oversight on banks collection as well as Management of the KYC Data that will also support in better credit risk management as well as providing up better data for client underwriting and debt collection.”

The Report also clearly stated that “The union also supported smaller franchisees as well as the profitability of the UAE banks by making sure that their customer service is being top-notch and having a better shorter turnaround time for customer on-boarding, including opening a bank account.”

This completely digitalized platform also proves economical as it curbs down the overall financial cost for banks of managing paper-based KYC data of all the registered companies.

The union of banks has partnered with the Norbloc, a blockchain-backed platform and applications provider. The Smart Dubai Blockchain banks’ cell, in collaboration with the Central Bank of the UAE, will overview and regulate the union’s operations.

The report is also aforementioned that “they expect all the other UAE-backed financial institutions and licensing authorities to slowly realize the core importance of this mission and join the platform gradually, which has all the utmost potential to become the pivotal component of the nation’s digital ecosystem. The KYC backed digital platform is expected to be rolled out in the first quarter of this year.



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