With the announcement of a major commercial service with backing from Canada’s ‘Big 5’ banks and a new research institute driven by the Tapscotts, complete with government funding, it’s fair to say that blockchain is having its moment in emerging to the mainstream.
Canada’s major banks are collaborating on a new shared service for the first time in 33 years and Greg Wolfond, founder and CEO of SecureKey Technologies has put himself right in the middle of it.
“Banks haven’t done something like this since the formation of Interac in 1984,” he says, referring to the non-profit debit card issuing body that just about every Canadian with a bank account will be familiar with, thanks to the logo on the card they carry in their wallet. Now the same banks that formed Interac – RBC, Scotiabank, TD, CIBC, and Desjardins, with the addition of BMO – are getting ready for a push to launch a new brand that is centered around enabling privacy-protected digital transactions. Expect to see the logo of the new, yet-to-be-named brand plastered across bank branches and websites later this year.
And that brand will be powered by the same underlying technology that gave rise to Bitcoin, with an IBM twist.
The service is designed to give Canadians better control over their private information when there’s need to prove their identity for a transaction. Managed from a mobile app, the user can
choose to share specific attributes that their bank or cell phone carrier knows about them with a third party. This is achieved using a digital ledger – namely IBM Corp.’s Blockchain platform – that SecureKey used to build its attribute sharing network.
“Canada needs this,” Wolfond says. “This is as much about social good as anything else.”
SecureKey was already collaborating with banks for its Concierge service, which helps individuals authenticate their identity to receive government services. That put it in a position to raise $27 million from Canada’s top six banks last fall to build a similar service with a much wider footprint. It’s also got the commitment of Canada’s big three incumbent carriers – Bell, Rogers, and Telus – to participate in providing identity attributes on the network.
Wolfond says that it will deliver banks value not only in meeting Know Your Customer (KYC) requirements, but will help them more efficiently accomplish digital transactions, including setting up a new bank account. Aside from credit agencies like Equifax and TransUnion, banks will now have other factors to help onboard customers.
Harbinger of transformation
The service will be the first blockchain project with such a wide commercial launch in Canada, signaling that the digital ledger technology has moved on from its days as the stuff of cryptocurrencies bearing odd names and firmly into the establishment.
“This is a major step forward for the Canadian banks and a harbinger of more exciting things to come as blockchain transforms the financial service industry,” says Alex Tapscott, the CEO of Northwest Passage Ventures and executive director of the Blockchain Research Institute. Tapscott, along with his father Don, just announced the founding of the Blockchain Research Institute in Toronto, which also involves IBM. The hub plans to research blockchain’s impact on various industries and is backed by $2 million in funding from Ontario’s government and several companies.
“By focusing on digital identity, a core foundation of trust and security in business and a major source of friction and cost in the economy, the Big Five are clearly thinking strategically about the long-term impact of blockchain,” he says. “The Canadian banks are often not the loudest cheerleaders but when they commit to something and work together, they can be global leaders.”
A SecureKey video explains the identity ecosystem that it’s building.
SecureKey’s service will help banking customers live digitally more easily, says Chuck Hounsell, senior vice-president of payments at TD Bank. From opening a bank account to interacting in a sharing economy transaction, the system will create trust around an individual’s identity. Tasks that currently take an hour could be reduced to just minutes.
After participating in many blockchain proof-of-concepts at the bank, this will be the first new business TD participates in. It had briefly considered launching its own private service for the same function, but determined it wouldn’t reach the critical mass required to be successful.
“Invariably, when we talked to potential users of the service, they said they’re only interested if everyone is going to be able to use it,” Hounsell says. “Eventually, I’d like to think one day that your shoe size will be an attribute you include here.”
The bottom line is that customers will just have more control over their privacy than they do today, he says. For example, when renting an apartment instead of handing over volumes of employment information and credit history to a landlord to store in some file cabinet forever, you can just share the attributes until you’re approved for the apartment, then pull back the access. It will also be possible to provide third parties with a licence that will update them whenever your personal information changes – like your address for example.
Technology traces back to Linux Hyperledger
That’s made possible because the IBM Blockchain technology is permission-oriented. It’s built on top of the Linux Foundation’s Hyperledger Fabric v1.0, which is an open-source community with the goal of creating a standardized, enterprise-grade distributed ledger framework and code base. It’s also come a long way from last year’s InterConnect conference, when it was first debuted to developers in a beta mode with a demo that involved trading differently coloured marbles, explains Mary Wiecke, head of IBM Blockchain.
“We see it as extending the value of interconnected networks even more than we see it addressing financial services,” she continues.
At a media panel hosted at InterConnect, IBM showcased other early users of its blockchain platform, including shipping and logistics firm Maersk, Walmart, the Japanese Stock Exchange, the Government of Dubai, and the Food and Drug Administration in the U.S. Maersk, for example, is already using the solution to track its shipping crates around the world with attributes like GPS location, temperature, and condition.
In other words, blockchain hasn’t just arrived in Canada, its commercial embrace is global. SecureKey plans to collaborate with IBM to take the work its done in Canada to other countries. It may be buoyed in part by its status as a Privacy by Design ambassador, showing it’s adopted former Ontario privacy commissioner Anne Cavoukian’s internationally-recognized privacy framework in its design.
That helped facilitate a triple-blind model that ensures user privacy, Wolfond says. The provider of the attribute doesn’t know what you’re using it for, the receiver doesn’t know who’s providing it, and there’s no middle man in between to watch what you’re doing.
“It’s like when you use your driver’s licence to prove your age at the Beer Store,” he says. “The person behind the counter accepts the proof, but the government doesn’t know you’ve done that.”
It’s about time that people were put back in control of how their personal information gets used in the digital economy, Wolfond adds. The individual should be in charge, not a web service that’s looking to monetize it.