Distributed ledger technology has huge potential to improve regulatory compliance processes, according to a report from the Euro Banking Association.

Cryptotechnology-based regtech answers could be particularly attractive for KYC data management, says the EBA report, because current processes are often fragmented and redundant, leaving financial institutions with higher costs and dissatisfied customers.

José Vicente, chair, EBA Cryptotechnologies Working Group, says: "DLT-based data sharing within a financial institution has the potential to improve data integration and error rates. If each department has a shared, uniform view of KYC attributes, customers will no longer have to re-submit KYC documentation for each additional service. DLT-based data sharing could even be extended to include multiple financial institutions."

DLT-based regulatory reporting systems also have a lot of potential, says Vicente: "Financial institutions are subject to multiple reporting requirements to various authorities at various frequencies. DLT-based reporting systems can be designed to be compliant with regulation from the outset and help make these reporting processes more efficient and fault-proof for the benefit of both financial institutions and regulatory authorities."

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