The financial industry needs to prepare for a radically different post-coronavirus world. And blockchain could be a big part of those preparations.
That was the message from Korean-language blockchain media The BChain in an analysis piece published Wednesday.
According to a recently released report on the post-coronavirus world by the Korea Center for International Finance (KCIF), banks are going to face extended periods of low interest rates, contractions of overseas business, mounting bad loans and deteriorating profitability.
The report said that the COVID-19 pandemic could structurally transform economic entities. Banks, which are highly sensitive to economic conditions, will also face new tasks.
In particular, the KCIF predicted that we will see the accelerated formation of the “untact economy” even after the end of social distancing due to the prioritization of public health and concerns over repeated outbreaks due to viral mutations. It also predicted an increase in macro risk due to changing trends in consumerism, travel, investment and trade.
The center said the first task banks face in the post-COVID-19 era is digitalization. Face-to-face transactions were already on the wane, and the pandemic would likely transform banks into digital banks.
The KCIF said banks could adopt blockchain technology in the wake of the coronavirus. In particular, they might introduce new technologies such as decentralized ID (DID), which banks are already discussing. They could also adopt central bank digital currencies (CBDCs) as central banks reduce their use of paper money and corporations boost their percentage of online sales.
Korean-language business news outlet MoneyTodayNetwork (MTN) also looked at how COVID-19 and the proliferation of “untact” solutions could accelerate the commercialization of blockchain technology in IDs and payments.
We’re also seeing blockchain wedded to facial recognition technology to produce untact payment solutions, as recently demonstrated on a trial basis by LG CNS.
The Korean-language daily Maeil Gyeongje took a deep dive into the coming age of digital ID as well.
According to the paper, the global market for blockchain-based IDs will climb from USD 10.1 million in 2021 to USD 25.2 million in 2025.
As readers of this publication already well know, DIDs provide a number of advantages, namely:
- Individuals can directly manage their own data
- When providing identification, you can submit only the information you need to submit
- DID minimizes the danger of leaking personal information through hacking
- Corporations are stopped from using personal information without permission
The Maeil Gyeongje notes that South Korean companies have jumped into the DID market, pointing to the country’s three big DID alliances: the Initial Alliance, the DID Alliance and, of course, the MyID Alliance. You can add to that list the recently born MYKEEPiN Alliance led by blockchain company Coinplug.
Led by ICON’s technology partner, ICONLOOP, the MyID Alliance currently has 47 partners, with service set to begin in the first half of the year.
The “MyID” DID solution that powers the alliance is unique in being included in the regulatory sandbox created by South Korea’s top financial watchdog. As we’ve written before, this gives the solution a leg up in the financial sector, including with cryptocurrency exchanges looking for an easy way to become KYC compliant in accordance with South Korea’s recent legal changes.
“Driven by COVID-19, more and more businesses are transforming themselves into digital-friendly players equipped with an ability to build the full range of trust even without face-to-face customer relations,” said Josh Choi, the Deputy Executive Director of MyID Alliance. “I believe the Decentralized ID such as MyID will play a crucial role in this fast-changing business environment as it had already been designed to build trust between stakeholders in zero-contact digital economy.”