Electronic voting for cities, governments and companies

This blog is intended to discuss the current state of Know Your Customer (KYC) technology and explore the new technologies that can be applied to the process as well as propose a methodology that can be implement to combine these technologies in new services for cities.

Today KYC has multiple challenges, including the cost of regulatory compliance, fraud, errors and privacy. A mixture of technologies including artificial intelligence, blockchain and electronic identity can be combined to solve these. At the same time the market for automated KYC services is expanding into new use cases, driven by regulation and digitisation of services. Among the potential new services, I am passionate about the electronic voting use case and the technologies we can bring to bring it to market today.

Can we build a cost effective truth machine that leverages decentralised resources, is auditable in real time by stakeholders and, as is the case of financial services for example, is compliant to regulations. Additionally can we apply this to complex use cases such as voting?

Know Your Customer (KYC) services are defined as guidelines that require professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship, along with the potential risks of illegal intentions towards the business.

KYC is currently being primarily used in the Financial Services industry and is regulated by national financial regulators such as Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in Germany, The Financial Conduct Authority (FCA) in the UK and the Securities and Exchange Commission (SEC) in the USA.

KYC stands out as a concept through which businesses and municipalities can identify their customers, as well as report criminals. The entire program has been coined to safeguard customers from being exploited by fraudsters. In Germany and other European nations, KYC has proved to be a significant program. In Germany, KYC is a common practice that business organisations are utilising to know their customers. KYC is used principally today in financial services, where economic services are offered. The program also helps companies cope with the challenges and risks involved in maintaining stable business relationships. KYC revolves around three tasks, which are establishing a customer’s identity, understanding the customer’s activities, and assessing money laundering risks. The identification tasks traditionally majors on details such as a customer’s names, address, identification number, and date of birth. However, recently services have evolved where an applicant’s image taken from their own mobile device, or computer, can be validated automatically against an image of their scanned identification documents.

In terms of verticals for usage of KYC amd Digital Identity, one of particular interest going forward may be voting, given that the market of traditional voting technology has been very expensive and failure prone. Just one state in the USA paid $30 million for one election and the old style machines were up to $1 million per station and this causes the potential for disruption. The most relevant estimate makes the Global Online Voting System market growing to USD $34 Billion USD by 2026 with a CAGR +11% from 2019 to 2026. Noting this does not cover the digital transformation of corporate voting.

What other technologies can we mix into a solution to get mobioe voting off the ground?

Digital Identity

Many countries such as Belgium, Italy, UAE and Singapore have advanced digital identity such that KYC need only be carried out once for all national services. During my work as design and implementation lead on the first edition of the European Blockchain Services Infrastructure, we worked on Self Sovereign Identity, the ultimate expression of digital ID.

AI & Machine Learning

Enables validation of individuals via third party algorithmic data analysis and fraud detection. PwC noted “[Machine Learning] allows systems to automatically reassess and refine processes in reaction to input from users, replacing firms’ more complex, high volume, and repeatable regulatory tasks.”

SSO integrationsAllows customers to enhance their validation from existing internet IDs from social platforms, enhancing ID veracity and eliminating the need to log in each time.The US State Departments has been using this methodology since 2017 to enhance their knowledge of foreigners entering the USA.

Blockchain and Digital identityEnables reuse of identity and provides a more secure and private identification storage capability.Integration of government and private-sector existing identity platforms.The Australian Government has declared that the opportunity for blockchain as a KYC utility is significant in its national strategy.

From our own research in the service of multiple public and private sector clients, we have established that here are also multiple uses of blockchain in the context of KYC, including:Audit trail – the first real time audit capability of the distributed ledgerDigital Identity re-use – including the potential to anonymously share KYC over multiple entitiesVoting – for corporate and governmental affairs, including the potential of an automated voting process for systems of record to adjudicate on identities in real timeBack office automation of processes – through the use of smart contracts, which embed processes into code that is guaranteed to work consistently every time

Audit of AI / ML algorithms – the blockchain is a key element in the security and audit capability to ensure that the algorithms execute correctly and securely while keeping an audit of activities to ensure compliance to GDPR and security standards.

Now there are severe headwinds with digital voting, not least of which being the control of coersion. However Estonia has started down the road and uses a simple method to limit the risk of coersion or other fraud, which is multiple voting, only the last vote counting. Security being a concern too, but mitigations are developing.

To my mind the trick we have to explore is the mix of technology and voting history, analagous to how cycling got rid of drugs in the professional sport with a health passport, but with more privacy.