Governance And Assurance In Banking SSI And Blockchain Technology

Functions of Self-sovereign Identities and Blockchain Technology in Banking Systems

The research proposal explains governance and assurance in banking SSI and blockchain technology as the future for banking systems. 

• Is governance and assurance in banking Self-Sovereign Identity and Blockchain the future for banking systems?

In contemporary society, every organization is talking about Blockchain. It’s one of the most highly versatile technologies used in almost every field, banking, pharmaceutical line, retail, or even the insurance industry. Blockchain was discovered close to one decade ago and is one of the most trending technologies of the decade. Talking of blockchain applications, it automates claims functions simply by performing verification coverage between companies and clients who have re-insured in the insurance field. It also lowers administrative costs for insurance companies by automating payments between parties. Blockchain could facilitate faster payments at a lower fee than banks by establishing a decentralized ledger for payments. A good example is Bitcoin. With this advantage, Blockchain could easily disrupt banking.

First, we have a digital ledger, which keeps the record of all transactions on point-to-point networks. It can be accessed by anyone, either with permission or not. Encryption is highly used in Blockchain, all information transferred over the block is encrypted, and if anyone changes one character, the network realizes the changes have done. There is no need for the central authority to certify the transactions by maintaining a decentralized system. Another characteristic that makes Blockchain secure and trusted is that there are very low risks of being hacked. The network updates previous books, making it impossible to revert the chain to which the blocks are sent.

Being hack resistant only applies to blockchains that use proof of work consensus algorithms, and around them, they have a huge mining community. A good example is Bitcoin or even Etherum Insecurity and hacks resistance, proof of work, and transparency are key, but other consensus algorithms have minimal characteristics of having minimum risks of being attacked. Managing our extrinsic identities through technologies like digital wallets and verifiable credentials will have a huge impact on people and enterprises.

Talking of verifiable credentials, these prove that you know something and anyone can give out about anything. Currently, our lives are gradually transferring online. Still, our credentials are being left behind, but with the advancement in technology, everything in our wallets can have an equivalent digital version. Using digital wallets, verifiable credentials, and other related technologies, self-sovereign identities are achieved, and online businesses and transactions can be carried out smoothly. This report explained how Banking and assurance in banking SSI and Blockchain are the future banking systems.

The research will explore the functions of self-sovereign identities and blockchain technology in banking systems, the various improvisations of the two technologies, the relation of self-sovereign identity and blockchain technology.

Through my research, I also hope to explore the importance of the two advancements when incorporated in bank systems to both the banking institutions and the customers.

Through the research, I hope to explore the relevance of my project and other related projects as the primary sources of information for future reference.

The research proposal also explores the various modifications that should be implicated in self-sovereign identity and Blockchain as digital identifiers to enhance a better customer experience.

Improvisations of SSI and Blockchain Technology

The study’s objectives are based on the two digital identifiers, i.e., self-sovereign identity and blockchain technology.

The objectives of the study are;

To gauge customers’ knowledge of self-sovereign identities and blockchain technologies.

This objective is expected that many customers of the various bank institutions have background information on digital identifiers. To analyze the popularity of digital identities, I will conduct research using questioners and face-to-face interviews with various bank customers. This research aim was to gauge the customers’ view on the issue of governance and assurance of self-sovereign identities and blockchain technology as the future of banking systems. The interviews and questionnaires focused on the customer’s knowledge of digital identities and their opinions on the effectiveness of these technologies and their governance and assurance that will ensure a seamless customer experience. Many customers favour digital identities and blockchain incorporation into bank systems, and many are even more willing to share their information with banking institutions.

To investigate how customers feel about the safety of using digital identities to enhance effectiveness in bank systems.

This objective focuses on customers’ relationships and the adaptability of using digital identities in transacting money via bank systems. In one of the primary surveys, customers felt that sharing their personal information with banks would enhance a beneficial personalized experience. However, many customers argued that protecting their money was a priority they felt banks needed to consider in incorporating digital identities. A considerable percentage of customers had an experience of using digital identities and Blockchain, and the smaller percentage that had not interacted with these advancements expressed the will to use them in the future.

To gauge the customers’ recommendations to improve the current digital identities system.

This objective focuses on how customers using the current system of digital identities feel the system needs to be improved to enhance a seamless experience. In a bid to improve digital identities, 65% of customers felt that banks needed to consider including their day-to-day transactional history to be part of their digital identities. 78% of customers felt that although banks have maintained a reputation of safety and trust, they needed to consider theft or money laundering cases using digital identities and blockchain technologies. Another 52% of customers expressed their interest in sharing their personal information with banking institutions to provide the banks with a personalized experience.

To find out the prevalence of digital identifiers amongst banking institutions

This objective points out the efforts of various banks to incorporate and use digital identifiers. A recent survey conducted on United States banks indicates how much the banking systems in the United States are lagging in incorporating digital identities and blockchain technologies. The report shows that only two-thirds of the American population has access to online banking, and only a third of this population has access to their accounts via mobile devices.

The research will be conducted using a combination of qualitative and quantitative analysis methods. The qualitative aspects of the research will include interviews, study of more related papers, and analyzing the databases available on the internet to create a broader understanding of the credentials and self-sovereign techniques that are leading the banking SSI and Blockchain to perform as the leading banking systems of future. The quantitative methods will include studying the surveys and reports on the subject to understand the tendencies shown by the public regarding the problem statement.

Importance of SSI and Blockchain Technology when incorporated in Bank systems

The book of, Human identity is a complicated topic that philosophers have debated about for many years, and as of now, nothing can settle these discussions. Ideally, human identity can be simplified into two parts that are intrinsic identity and extrinsic identity. Intrinsic identity is just what we see when we look in the mirror. It can either be gender identity or even cultural identity. This is the truest form of identity since it tells who we are in the context of our relationships with our closest kins. The extrinsic identity is how others and mostly the institutions identify us. Taking an example of a driver’s license proves one’s eligibility to drive on public roads, but financial institutions or airports use it to identify the holder.

Self-sovereign identity is the union of one’s real identity with the digital world, and it aims at bettering the lives of the users. Being a premature technology and in its infancy stage, there is a long road ahead to make this digital identity as legitimate as the real-world identity[13]. Many promising technologies represent a huge breakthrough, including digital wallets and the standardization of verifiable credentials.

A digital wallet is a secure environment where you can keep important cards like a driver’s license. Trinsic is the leading provider of Self Sovereignty Identity technology. The reason is that we believe self-sovereign identity will bring accessibility to people everywhere, which adds significant value for businesses everywhere. Trinsic launched the first SSI wallet more than one year ago. Whether physical or digital, a wallet remains a container, and it needs contents to be valuable. The cards digital wallets hold are referred to as verifiable credentials. The standard and secure way to represent extrinsic identity online is by using verifiable credentials; being the primary contents in a self-sovereign identity wallet, they cannot be transferred, tamper-proof and digital.

First, we have a digital ledger, which keeps the record of all transactions on point-to-point networks. It can be accessed by anyone, either with permission or not. Encryption is highly used in Blockchain, all information transferred over the block is encrypted, and if anyone changes one character, the network realizes the changes done. There is no need for the central authority to certify the transactions by maintaining a decentralized system. Another characteristic that makes Blockchain secure and trusted is that there are very low risks of being hacked. The network updates previous books, making it impossible to revert the chain in which the blocks are sent according.

A blockchain network seems to perfectly fit within the business models of insurance companies. It allows them to offer the insurer good insurance that meets their needs and avoid having generic insurances for every client. Blockchain brings many key aspects for insurance business models, such as automatic payrolls, risk hedging, and asset traceability. Automation and a huge decrease in paper consumption are among the many advantages of blockchain technology. If all banks were to adopt blockchain technology, flaws would be near to not happening.

Blockchain has been the most disruptive innovation for current business models since the coming of the internet, and it’s capable of solving many issues across different industries. Either way is not every business solution, and it is new and still under development. To understand the disruption brought about by this technology, we must understand its functionality. In simple terms, we can describe Blockchain as distributed data structures secured cryptographically and linked together after all the parties agree on a certain set of predefined rules.

Modifications to Digital Identifiers to Enhance a Better Customer Experience

Research has been carried out in China, where Blockchain is compared to a mesh network where every node is connected to any existing node in the same network, and the information is made available. Any change in the transaction is attached to the existing chain of the network, and each group of available transactions becomes a block.

Blockchain technology, Digital information is distributed but cannot be copied. It has several fields; the data field indicates the value of the transaction attached to the block, including sender, recipient, and amount. Hash code is a special code for every transaction and the previous block. The fascinating feature of this technology is that millions of computers host it. Data is available to anyone, even the malicious attackers on the internet, but the direct distortion of data is not possible due to its decentralized nature. A shared ledger system that is used in banks, a distributed ledger system should be used since it gets automatically updated after any change occurs on the currently available version.

Through cryptocurrencies, blockchain technology has had an impact on financial markets, as well as other businesses. The study relies on data and information from technology, economics, finance, and politics to form four prerequisites for fundamental technology’s future. For the hypothesis to be confirmed, the condition technique was combined with trend analysis. This research shows that blockchain technology has a substantial impact on the banking sector. Therefore, businesses that adopt this technology in the next five to ten years are more likely to achieve abnormal profits during the Fourth Technological Revolution.

A study undertook a comprehensive survey of blockchain technology applications and used cases to create smarter, more secure, and trustworthy systems. Research shows that blockchain technology can be used in various industries, including finance, the internet of things (IoT), cybersecurity and smart property. A year later, another study was conducted a comprehensive review of blockchain technology regarding its design aspects, characteristics, and benefits. This study used a systematic review method to conduct a wide-ranging investigation when it comes to blockchain-based applications in many industries. Cryptocurrency applications and the benefits of Blockchain: transparency, business continuity, disintermediation and trust were demonstrated in this study.

Figure 1

Source: Created by Author

While conducting the primary survey on respondents, this research proposal adheres to the ethical conduct of research in the following ways;

• When collecting data from respondents, no respondents will be subjected to any form of harm or mistreatment.
• All respondents will be treated with respect, and the researcher will maintain a code of respect and dignity during the survey.
• the researcher will collect all data collected from respondents with the consent of the respondents having full knowledge of the research
• The research swears to maintain a code of secrecy and privacy between the respondents and the researcher.

This research proposal does not include any inappropriate research methods, any form of inappropriate use of information, or any form of bias. The proposal also exempts itself from any cheating, including instances of plagiarism or copyrighted information.

While researching this proposal, there will be no problems involving the public members. In the case where the research involved members of the society, a code of confidentiality, privacy, and respect will be maintained.

All the guidelines have been followed outlined in this research proposal, and the report does not have information that is out of the research topic. All the required information, sources, and resources used in this project are included in this research paper.

In the course of the research, it will not involve the research in stealing information, stealing equipment for the research, sabotaging activities, or impersonating identity.

Conclusion

The future of the banking system relies on the governance of the self-sovereign identity and blockchain technologies. These technologies are very efficient and are favoured by incredible speeds that ensure information about a particular customer is accessible, provable and efficiently managed. Any individual can create their own identities and contain their information. The platforms are also very safe, and data is stored privately, and only certain people have access to the report. All businesses carried out within these platforms are recorded and held to use both the bank and customers for future reference. 

The use of digital identities will also favour the bank systems by reducing staffing costs as many processes will be carried electronically, reducing the bulkiness and expenses that involve the use of papers and documents. They also enhance customer experience by providing better service delivery, more straightforward data analysis, and more security regarding money handling.

In conclusion, digital identities have disadvantages that may also reduce their efficiency, especially in ensuring customer experience. These disadvantages are; they are vulnerable to compromise, especially in the face of cyber security attacks, which may cause massive data losses. Privacy limitations may also limit them due to recording, storing, and scrutinizing delicate information. The initial installation cost and maintenance cost of these technologies is high and may seem expensive to some firms; however, the advantages of these advancements outweigh the drawbacks.

Figure 2

Source: Created by Author 

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