Earlier this month, Otto Mora from Polygon ID and Kim Duffy from DIF hosted a webinar titled "Credential Schemas: Streamlining KYC." We were thrilled with the enthusiastic participation and valuable feedback we received from attendees.
Throughout the webinar, we conducted interactive polls to gather real-time feedback from participants. Here's a recap of the key highlights, discussions, and feedback throughout the session.
Understanding Decentralized Identity
We began with an introduction to decentralized identity, explaining the technologies and principles that empower individuals to control their digital identities and personal data. Key benefits include:
- Privacy & Security: Ensuring data is shared only with necessary parties, protecting against misuse.
- Streamlined Onboarding: Facilitating efficient customer onboarding with trustworthy data.
- Bi-Directional Trust: Reducing fraud and fostering confidence in interactions.
- Trust & Transparency: Enhancing economic and social opportunities through new markers of trust and reputation.
We asked participants “In your opinion, what is the most impactful use case for decentralized identity?”. At 36%, “Enhancing privacy and security” took the lead, with “Streamlining onboarding processes” coming in second at 27%.
The responses to “Other” included interesting applications such as:
- Governance, membership, voting, and sybil resistance
- Virtual rights management (VRM)
And others added powerful cross-cutting differentiators of SSI including user-controlled identity and interoperability.
For the rest of the webinar, we focused specifically on the "streamlined onboarding" benefit.
Real-World Use Cases
We explored various use cases where credential schemas can make a significant impact in onboarding:
- KYC/KYB: Streamlining financial transactions with verified identity claims.
- AML: Reusable claims to help identify and protect against money laundering.
- Age Verification: Ensuring age-appropriate access to services and content.
We asked participants which credential schemas they (and their companies) are interested in. KYC took the lead, which was not surprising given the webinar theme.
We had a freeform option to enter other credential schemas of interest, and participants responded with:
- Known customer credential
- Verifiable product-related sustainability information
For the rest of the webinar, we focused specifically on Decentralized Identity and credential schemas as they benefit KYC/KYB use cases.
Challenges in Traditional KYC/KYB
We reviewed challenges with traditional KYC/KYB processes, including:
- High Costs: Traditional methods are costly and resource-intensive.
- Compliance Complexity: Meeting compliance requirements like AML assurance is challenging.
- Time Inefficiencies: Current processes are time-consuming and require substantial manual effort.
The Role of Credential Schemas
We highlighted the importance of credential schemas as data templates that ensure consistency and interoperability across systems. The benefits include:
- Facilitating Innovation: Enabling innovators to focus on new applications rather than compatibility issues.
- Enhancing Interoperability: Ensuring credentials are broadly recognized across different systems.
- Encoding Best Practices: Capturing best practices and recommendations from experts.
- Boosting Efficiency: Reducing the need for custom integration work.
DIF’s new Schema Work Item
We announced DIF's new schema work item, to be launched at the end of May, dedicated to credential schemas including:
- Basic KYC Model: For identity verification across financial services and other sectors.
- AML Schema: To comply with anti-money laundering regulations.
- Proof of Age: To verify age or age range for access to age-restricted content.
- Proof of Humanity: To confirm real human identities, useful for community governance and anti-fraud.
General Discussion
The discussions provided us with great insights; one such key insight is that such schemas do not need to provide the complete answer – if they can shave off 80% of the verification work, then that’s a win.
We also discussed the importance of schema discoverability to promote convergence, which we'll discuss more later.
Thank You for Your Participation
We extend our heartfelt thanks to everyone who joined the webinar and contributed to the conversation. Your feedback was invaluable and underscored the relevance and potential impact of credential schemas in streamlining KYC processes.
As discussed during the call, an interdisciplinary, holistic approach is key to the success of this effort, and we'd love to continue the discussion with you!
Contact membership@identity.foundation if you'd like to get involved. We are targeting an end of May start date. You can join the work item later, but getting involved now ensures we factor in your availability.