An initiative aimed at delivering a new digital ID in Japan promises to make banking more efficient for consumers in that country using technology that underpins digital currency transactions around the globe. That’s not all. Based on early reports and interest in the technology, the effort could lead to improved government services for Japanese citizens.
Japan wants to use blockchain-based digital IDs to create a national property registry that also includes sales prices, and for government contracts
What’s happening is this: The Financial Services Agency of Japan, one of the country’s main regulators, is working with three financial institutions—Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui and Mizuho—on a shared digital ID system based on blockchain. Blockchain, which underlies bitcoin transactions, is a secure and public permanent record of all transactions that take place between two parties. Essentially, any two-way transactions become registered and available to everyone to consult, completely independently of a central authority—such as a bank—to keep that record.
Digital ID in Japan backed by biometrics
The financial authority and the banks want to create a system that enables consumers to open accounts at different financial institutions. The idea is that a consumer with an account at one of the participating banks would use the blockchain-backed digital ID to access banking services at other institutions taking part in the program. Those consumers would use a smartphone app to confirm their identities, which would be biometrically authenticated via fingerprints or facial recognition software. That saves consumers time, as opening a bank account in Japan typically requires ID authentication via mail—a process that reportedly can take up to a week.
The Financial Services Agency of Japan says it wants to begin tests of the blockchain-based digital ID in Japan next month, but offered no further details about the scope of that initial work, or when other financial institutions might be invited to join.
The future of such a blockchain-based system is glimpsed via the fact that Dai Nippon Printing reportedly will take part in the digital ID test. The company plans to build machines that dispense cash cards to consumers using the blockchain technology, and whose effort will involve facial recognition technology and “scans of chips embedded in driver licenses and other ID cards,” according to Banking Technology.
According to other reports, Japan wants to use blockchain-based digital IDs to create a national property registry that also includes sales prices. The country also is exploring similar technology for the publication and awarding of government contracts.
Digital ID in Japan is not the only example of blockchain-based technology moving from the financial sector to government agencies. In the United States, for instance, the Postal Service is considering using blockchain to improve or add new products, including person-to-person funds transfers and currency exchanges.