Canadian Bankers Association Weighs Blockchain for Digital ID System
Amid a consultation on allowing open banking in Canada, the CBA has launched a campaign pushing for the development of an online identification system.
The Canadian Bankers Association (CBA) has recommended to the federal government the creation of a digital identification system as part of a plan for the introduction of open banking in the country, the Star newspaper reported. An ID system built with the right new technologies, including blockchain, would guarantee security and stimulate economic growth, CBA president and CEO Neil Parmenter was cited as saying.
Speaking at the Economic Club of Canada, Parmenter explained that the digitalization of ID processes would speed up business activity by eliminating the need for physical and paper-based data checking. Canada cannot waste time since technology development makes the need for digitalization “more urgent,” he told attendees.
The digital system should be “federated” in order to link provincial systems to the central one. In the Canadian state structure, local authorities are responsible for some of the ID-dependent issues such as social insurances and driving licenses.
“Instantly verifying who someone is using multiple digital reference points is more secure than relying on a photocopy of a drivers’ license. Because this digital network is connected, yet decentralized, the risk of compromising the system is reduced by eliminating ‘honeypots’ of data that hackers tend to target,” Parmenter explained as quoted by the Star.
Separately on Thursday, CBA rolled out “Banks and Innovation: Change You Can Trust” - a campaign advocating ID digitalization. The association push comes amid recently launched governmental consultation on open banking, a framework that would allow consumers to share their data with fintech companies, including crypto and blockchain projects, with the possibility to opt out at any time.
“Fintechs and other financial service providers can use that data to develop innovative products and services that are more tailored to consumer needs and preferences, leading to a more globally competitive sector,” the Canadian Department of Finance says in the consultation paper.
The CBA campaign is also directly connected with recent changes in the Canadian Banking Act to allowed banks to invest in fintech. However, those investments would be harder without a trusted digitalized ID system.
The open banking consultation will continue until February 11, 2019.