Japan developing shared ID system for banks
Fintech innovation will employ blockchain technology
TOKYO -- Japanese consumers may soon be able to create a common identification to be used to open accounts at multiple banks and financial houses without the hassle of re-entering personal information.
A system overseeing the process will be jointly developed by the Financial Services Agency and various financial institutions. An administrative body for the system will also be established. The feature will be rolled out at the three megabanks first.
In this set-up, an account holder at one bank can register for a shared ID. If the individual wishes to open an account at a second bank, all she needs to do is provide the common ID through a smartphone app, and confirm her identity through fingerprint or facial scan.
The personal data will be stored and administered by blockchains, the digital ledgers that are considered difficult to falsify or erase. The financial technology is also said to decrease the risk of data breaches. Blockchain records can also help authorities investigate identity theft or suspect transactions.
The FSA, which is establishing a fintech testing hub on Thursday, plans to begin tests of the innovation next month. The trial will extend to next spring and will determine the risk for data leaks or other problems.
If all goes well, the Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp. and Mizuho Bank will launch the service soon after.
Because of Japan's identity verification requirements, it could take a week or so to receive a cash card after the initial request. Even if one opens an account via smartphone, the user still has to verify her identity via mail.
Dai Nippon Printing will also join the testing hub by developing equipment that will immediately dispense cash cards once the account holder is verified. The process will involve facial recognition and scans of chips embedded in driver licenses and other identification cards.