Securitize is rolling out a common identification system for its customers that it hopes will streamline the know-your-customer (KYC) process for all participants in the security token ecosystem.

The company announced its new identification service, Securitize ID, Thursday, saying any individual who completes their KYC process with the transfer agent can use the same information when trying to onboard with any other company which adopts the service.

Securitize ID will be a standard that other companies working on security token issuances can adopt, said Carlos Domingo, Securitize's CEO and cofounder.

"Within the ecosystem of the companies we work with for participating in a securities offering, there are issuers, there are transfer agents like us, there are custodians and ideally we can all agree on a common ID that is shared across all of these institutions that is compliant," he told CoinDesk in a Zoom call.

Essentially, a customer can sign up to Securitize, submit their KYC documentation, and be assigned an identifier. These customers or businesses will be monitored against regulatory watchlists, such as the U.S. Office of Foreign Asset Control Specially Designated Nationals sanctions list. If a customer wants to sign up to another company that accepts Securitize ID, they can use a single click to submit the same KYC documentation to that new company, rather than go through the process again.

Businesses

Securitize has been working on the new system for close to six months, Domingo said. Securitize's system also automates much of the process, rather than have an employee manually input details, which can take days, if not weeks.

This manual input, used by some traditional financial firms, is one of the reasons the KYC process can take an extended period of time Domingo said, pointing to a Refinitiv (formerly Thomson Reuters) survey which found financial institutions spend 26 days on average onboarding new clients.

"We had the basic blocks because we were already doing ID for each individual issuer and the first step was to bring issuers onto the same platform," he said. "That technology gave us a great advantage because it used to take a week or two [to conduct KYC] and now it takes like two seconds."

Securitize ID will be an actively managed service, Domingo said. If a customer's documents – for example, their passport – expire, the company will reach out to the individual to add an updated document.

This keeps the data fresh, Domingo said.

Even though the service uses a blockchain, if a customer wishes to move on, Securitize can delete their KYC information, Domingo added.

"We only keep non-personally identifiable information [on the blockchain] because it's hard to delete things," he noted. The company itself will store the KYC information, using the same security protocols it already uses when storing customer information, but will assign each customer a number, which is what gets stored on a blockchain.

Securitize ID is part of the company's efforts to digitize securities

Transfer agents traditionally conducted a lot of their processes in-person, but this is likely to change amid the ongoing COVID-19 pandemic, he said. Securitize did not need to stop or slow down operations when its employees went remote, but this may not have been the case for traditional transfer agents.

"In many cases things are manual or paper based or face to face just because of legacy [reasons] but not because of regulation or law or anything, so once people take the step of moving to digital I don't see why they'll go back to not digital," he said.