Blockchain framework to strengthen knows your customer (kyc) processes and data transparency (in case of cooperative bank of oromia
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Date
2026-11-02
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Addis Ababa University
Abstract
The evolution of the KYC process has gone from a simple process to a more thorough one regulated by the regulatory authority of each country. The paper-based manual KYC process is neither cost-efficient,not fast nor customer-centered. In many countries, at least to some degree, the majority of financial institutions have to pay an estimated amount of approximately $550 million for conducting the process of KYC regulation. With the introduction of new laws and regulations concerning the process of KYC compliance in most parts of the world, there might be the chance that the cost for compliance will go up. The aim of this paper is to consider the case of Financial Institution and Cooperative Bank of Oromia through expert interviews and relevant literature analysis. As a result of the conducted analysis of the case study, factors like communication, source of information, validity of documentation, policy conformity, lengthy process, customer dissatisfaction, increased workload on the employees' side, inaccuracy, lengthy document searching process, lack of automation were identified as the main problems that arise as a result of the current process of KYC and hence render it outdated and unsuitable for business purposes. It becomes apparent that implementing blockchain technology in order to conduct KYC process would resolve all the above-mentioned problems. Some of the potential obstacles related to the implementation of blockchain could be legal risks, resistance to change, lack of trust, educating the customers, employees' training, redundancies, and energy consumption. Overcoming methods for these obstacles have been discussed in the results chapter. A number of suggestions with regard to the adoption of blockchain technology have been made including KYC automation, common KYC standards, conducting pilot projects, and linkages within the bank
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projects, and linkages within the bank.