Japan’s three largest banks are collaborating on a digital identity initiative that will be anchored on blockchain technology.
A new report by the local newspaper Nikkei revealed that the three—MUFG (NASDAQ: MUFG), Mizuho (NASDAQ: MZHOF) and Sumitomo Mitsui (NASDAQ: SMFNF)—have also invited Shizuoka (NASDAQ: SHZUY) and Fukuoka Financial Group (NASDAQ: FKKFF), two leading regional banks, to partner on the project.
The project envisions a new digital identity solution that enables users to store personally identifying information such as name, date of birth, address and more on their mobile phones. They can then share these details at will, including when opening new bank accounts or obtaining credit cards.
The solution will be underpinned by distributed ledger technology, enhancing security and giving users full ownership of their data.
The three megabanks plan to kickstart the trials later this year and launch the new solution next year.
Japan has struggled with digital identity over the past decade. Despite being Asia’s second-largest economy after China, it lags behind most of its peers on the digital front. Prime Minister Fumio Kishida’s government has been pushing digitalization in recent years, but it has yet to catch up with more advanced neighbors.
One of Japan’s biggest efforts is My Number, a 2016 digital identification system that the Kishida administration has revived over the past three years. Last year, My Number experienced widespread glitches, during which thousands received strangers’ identity documents. Months later, it was revealed that the system had linked over 130,000 My Number cards to the wrong bank accounts.
Still, the Kishida government continues to push the initiative. Last month, it announced a deal with Apple (NASDAQ: AAPL) in which Japan would become the first overseas market where iPhone’s Apple Wallet will support an official government-issued digital ID. The new feature will roll out starting next year.
Japan also recently announced a cooperative agreement with the European Union on digital identity management. The two pledged to cooperate and share expertise on enhancing security in digital identity and explore simpler and more efficient verification processes.
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