Knabu, a start-up in the field of crypto, tests banks' regulatory reports with Factom, one of the oldest blockchain companies in the industry.
Returning exclusively to CoinDesk, the London-based company is launching the 30-day pilot project today.
Knabu is best known as a payment company with a smart deposit product designed to help companies mitigate the risks associated with holding assets held on a blockchain. It is simultaneously applying for a banking license in the United Kingdom, with the aim of becoming a bank that can serve cryptographic companies and channel chains normally excluded from traditional banking services.
"The objective of the pilot project is to begin to prove the effectiveness of the blockchain, especially as a basic infrastructure for a bank," said CoinDesk Gabrielle Patrick, founder and CEO of Knabu:
"The average cost of regulatory compliance for a bank is about 30% of its budget. … We are a company that first has a chain of chains and we felt it was necessary to demonstrate the features that can reshape that. "
Compliance costs for banks are high due to the number of manual processes to repeat. Knabu will perform customer checks on your customer (KYC), know-your-business (KYB) and anti money laundering (AML), encrypt the data and send it to Factom for further information. it is registered on the Ethereum and Bitcoin blockchains. .
"We wanted to avoid repeating the same KYC, KYB and AML checks," Knabu's Chief Technology Officer and co-founder Hakim Mamoni told CoinDesk. "(Traditional banks) do not have the same flexibility in terms of data access."
As part of its desire to bank other underserved businesses, Patrick also wants to serve small and medium enterprises as well as fintech startups.
Knabu would name the encrypted trading platform EthBits. IdentityMind will perform Knabu's KYC and KYB checks, while DMG Blockchain will use blockchain forensic information tools, such as Blackseer and Walletscore, to pre-check the AML on customers' Bitcoin and Ethereum portfolios.
The Factom blockchain builds data strings and then retains them on Ethereum and Bitcoin block strings using a Merkle root. The Factom service, which was previously operated by customers using Factoid chips, is fully managed by Factom, Knabu transmitting the data to the company with the help of a programming interface. application (API).
"It allows us to take advantage of the power of the bitcoin and ethereum block chains to ensure that your data is what you claim to be," Carl DiClementi, vice president of products at Factom, told CoinDesk.
Knabu, Knabu's chief executive, said the pilot project was in line with the work of the UK's Financial Conduct Authority, which was examining ways for financial institutions to digitize regulatory reports. Knabu also aims to test in the future the constitution of capital reserves on the blockchain of Factom.
"The goal is to eliminate inefficiencies and serve underserved businesses," said Patrick, adding:
"Many areas are underserved because the cost is too high."
Bank image via Shutterstock