What Is Reusable KYC? How It’s Transforming Identity Verification

Key takeaways

• Reusable KYC is changing how identity verification works by allowing users to verify their identity once and reuse those credentials across multiple platforms—eliminating redundant verification steps.
• Unlike traditional KYC, which requires users to submit documents repeatedly for every service they access, Reusable KYC reduces friction, speeds up onboarding, and enhances security.
• Businesses and financial institutions benefit from lower compliance costs, improved fraud prevention, and streamlined regulatory alignment.

 

The rapid expansion of digital payments has transformed global finance, with transaction volumes reaching unprecedented levels. In 2023, the Unified Payments Interface (UPI) handled 3,729.1 transactions per second, outpacing major platforms like Alipay and PayPal. As economies like the United States, China, and Norway continue their shift toward cashless transactions, the demand for fast and secure identity verification is greater than ever.

To mitigate fraud, Know Your Customer (KYC) regulations require financial institutions to verify customer identities. While essential for security, traditional KYC processes have not evolved at the same pace as digital transactions. Slow verification times, repetitive document submissions, and rising compliance costs create inefficiencies that impact both businesses and users.

Moreover, not all digital transactions are legitimate. Payment networks like Visa and Solana process up to 65,000 transactions per second, presenting opportunities for fraudsters to exploit verification gaps. These challenges raise a critical question:

Can Reusable KYC streamline compliance, strengthen security, and improve the user experience while reducing operational costs?

What Is Reusable KYC?

Reusable KYC allows individuals to verify their identity once and securely reuse their verified credentials across multiple platforms and services. Instead of repeatedly submitting documents for every new bank, fintech app, or online service, users can store and share their pre-verified KYC data with authorized entities as needed. 

Similar to reusable digital identity, this approach eliminates redundant verification steps and ensures a seamless, privacy-enhancing, and efficient onboarding experience—benefiting both users and businesses.

The Challenges With Traditional KYC

As digital transactions continue to grow, traditional KYC processes are becoming increasingly inefficient. The conventional approach requires every financial institution, fintech platform, or service provider to conduct separate identity verifications, even if a user has already been verified by another trusted entity. This results in:

• Redundant document submissions, increasing compliance costs and delaying onboarding.
• User frustration, as individuals must repeatedly provide the same information across different services.
• Security risks, with personal data stored in multiple centralized databases, making it vulnerable to breaches.

While electronic KYC (eKYC) has introduced digital verification, it still requires businesses to conduct separate identity checks, limiting its ability to streamline the process fully.

Traditional KYC vs. Reusable KYC: Key Differences

Feature	Traditional KYC	Reusable KYC
Verification Process	Each provider verifies a user’s identity from scratch.	The user’s verified identity can be securely shared and reused.
Efficiency	Slow and repetitive, requiring multiple submissions.	Faster onboarding with minimized redundant checks.
Cost	High operational costs due to repeated verifications.	Lower costs by reducing duplication of verification efforts.
User Experience	Frustrating due to repeated data entry, and it leads to a high drop-off rate.	Seamless experience with fewer verification steps.
Security & Privacy	User data is repeatedly shared, increasing risk exposure.	Data is verified once and reused securely, reducing risk.
Compliance	Each provider must separately meet KYC compliance.	Compliance is streamlined across multiple platforms.

How Reusable KYC Works

Reusable KYC works through a series of interconnected steps:

• One-Time Verification: Users complete KYC verification once with a trusted provider using government-issued identity documents, biometric authentication (such as facial recognition or fingerprint scanning), and proof of address.
• Secure Credential Storage: Once verified, users’ credentials are securely stored in encrypted digital identity wallets or decentralized identity networks, reducing reliance on centralized databases.
• Selective Data Sharing: Instead of sharing full identity details, users can selectively disclose only the necessary information (e.g., proof of age or residency) with service providers.
• Instant Verification for Businesses: Businesses receive cryptographically signed credentials, allowing them to verify key user attributes instantly—eliminating friction in onboarding and authentication.
• Regulatory Compliance & Privacy Protection: Reusable KYC aligns with global regulations like AML, CDD, and GDPR, ensuring compliance while enhancing user privacy and minimizing data exposure.

Key Features of Reusable KYC 

Below are the core features that make Reusable KYC a more efficient and secure approach to identity verification:

1. One-Time Verification With Continuous Access

A 2022 global survey by Fenergo found that over 54% of banks spend between $1,500 and $3,000 per client on KYC reviews, with 21% spending over $3,000. These costs come from repetitive verification processes across different institutions.

With Reusable KYC, users verify their identity once with a trusted provider and reuse their credentials seamlessly across multiple platforms.

For example, Singapore’s MyInfo allows citizens to authenticate once and reuse their verified data across government and financial services—eliminating repeated document uploads and lengthy verification processes.

2. Privacy-Preserving Verification

Traditional KYC requires excessive data collection, increasing the risk of breaches and identity theft. Reusable KYC minimizes this risk by allowing users to share only the necessary information instead of their full identity details.

Rather than submitting an entire government-issued ID, users can verify specific attributes—such as age or address—without exposing additional personal data. This enhances privacy, reduces data exposure risks, and ensures regulatory compliance while maintaining security.

3. Secure and Decentralized Data Sharing

Centralized KYC databases are prime targets for hackers. A 2024 Identity Assurance Company report found that 80% of consumers would consider switching banks after a data breach. 

Reusable KYC addresses this risk by leveraging decentralized identity frameworks—such as verifiable credentials and blockchain technology. This ensures that identity data is shared securely without storing raw personal information in centralized repositories.

For example, the European Digital Identity Wallet enables citizens to share verified credentials with banks and businesses securely, reducing reliance on high-risk centralized storage systems.

4. Interoperability

One of the biggest challenges in KYC compliance is lack of interoperability between institutions. Today, a user verified by one bank must undergo the same KYC process when opening an account elsewhere, leading to inefficiencies.

Reusable KYC solves this by enabling cross-platform identity verification—allowing a single verified identity to be accepted across banks, fintech apps, government agencies, and service providers.

For example, India’s Aadhaar system enables seamless KYC verification across financial and telecom services, while the European Union’s eIDAS framework ensures recognition of digital identities across member states. Interoperability reduces compliance burdens while maintaining security and trust.

5. User-Controlled Data Sharing

As data privacy concerns grow, consumers are demanding greater control over their personal information.

Reusable KYC puts users in control, allowing them to choose what information to share and with whom. Instead of submitting personal details repeatedly to different providers, users can share pre-verified credentials that disclose only the necessary data.

This shift toward self-sovereign identity enhances privacy, security, and regulatory compliance while reducing reliance on centralized data storage.

The Benefits of Reusable KYC for Businesses and Users

Reusable KYC benefits both businesses and users, addressing key challenges in compliance, fraud prevention, and privacy.

For Businesses and Financial Institutions:

• Reduces Compliance Costs: Traditional KYC is costly due to repeated identity verification across different providers. Reusable KYC eliminates duplication, cutting operational expenses and streamlining compliance processes.
• Speeds Up Onboarding: Manual KYC checks slow down customer onboarding. With reusable KYC, verified identity credentials can be instantly shared, reducing delays and improving customer satisfaction.
• Minimizes Fraud Risks: By leveraging verifiable credentials and end-to-end encryption, reusable KYC reduces identity fraud and unauthorized access. Since it moves away from centralized databases, it becomes harder for criminals to exploit financial systems.
• Ensures Regulatory Compliance: With global regulations tightening, financial institutions must meet anti-money laundering (AML) and data protection laws. Regulatory bodies like the Financial Action Task Force (FATF) and the European Banking Authority (EBA) advocate for stronger, interoperable KYC frameworks. Reusable KYC provides a transparent, auditable verification system, ensuring compliance while reducing regulatory burdens.

For End Users:

• Convenience: Users no longer need to verify their identity repeatedly for each new financial service. One-time verification allows seamless access across multiple platforms.
• Privacy Protection: Instead of exposing unnecessary personal information, users share only the required details, enhancing privacy and limiting data exposure risks.
• Greater Data Control: With reusable KYC, users retain ownership of their verified credentials, reducing reliance on centralized databases and strengthening personal data security.

Real-World Applications of Reusable KYC

Reusable KYC is already making an impact across several industries, simplifying identity verification and reducing friction for both users and businesses. Below are key sectors where it’s being used today, along with areas where its potential is still unfolding.

1. Financial Services & Banking

Reusable KYC is streamlining customer onboarding and identity verification in both traditional banking and digital finance. Customers can open accounts, apply for loans, and access financial services without the hassle of repeatedly submitting documents. In the crypto space, it enables traders to verify their identity once and reuse their credentials across multiple exchanges and DeFi platforms—ensuring compliance while reducing delays.

2. Healthcare

Hospitals and healthcare providers can use reusable KYC to verify patient identities quickly and accurately. This reduces administrative burdens while enhancing data security. It also allows medical records to be stored as verifiable credentials, enabling patients to share only the necessary health data with trusted providers without exposing excessive personal information.

3. Cryptocurrency & Web3 Platforms

With growing regulatory scrutiny on crypto exchanges and decentralized applications (dApps), reusable KYC provides a seamless solution for users to meet compliance requirements. Instead of undergoing separate identity checks for every platform, users can verify once and reuse their credentials across various Web3 services, improving accessibility while reducing onboarding time.

4. Gaming & Online Gambling

Regulations in gaming and gambling require platforms to verify user identities and prevent underage access. Reusable KYC makes this process smoother by allowing players to verify their age and identity once and reuse their credentials across multiple gaming platforms, ensuring compliance with local laws while maintaining user privacy.

5. Age Verification

Many industries—including alcohol sales, tobacco retail, and online content platforms—must enforce strict age verification laws. Reusable KYC enables seamless, privacy-preserving age verification, allowing users to prove their age without exposing unnecessary personal details.

6. E-Commerce & Marketplaces

Online marketplaces rely on identity verification to prevent fraud and build trust between buyers and sellers. With reusable KYC, sellers can verify their identity once and use the same credentials across multiple platforms, reducing onboarding friction while improving security for all parties involved.

7. Government & Public Services

Governments are integrating reusable identity verification into public services as part of broader digital ID systems. From tax filings and social security claims to voter registration and border control, reusable KYC simplifies interactions with public institutions while enhancing security, efficiency, and privacy.

Challenges and Limitations of Reusable KYC

While reusable KYC presents significant advantages, widespread adoption comes with its own set of challenges. Here’s what still needs to be addressed:

1. Business Trust and Adoption

For reusable KYC to succeed, businesses need confidence in the verification process conducted by third-party providers or decentralized identity networks. Many institutions are hesitant to rely on external verifications due to concerns over liability if fraudulent identities slip through. Clear legal frameworks and industry-wide validation standards are crucial to gaining their trust.

2. Security Risks and Fraud Prevention

Decentralized identity frameworks strengthen security, but threats like deepfake fraud and synthetic identity fraud remain a concern. If fraudulent credentials are mistakenly verified, the impact can be widespread. Unlike traditional KYC—where a breach might affect a single institution—a compromised reusable KYC credential could be exploited across multiple platforms, amplifying the risk.

3. Regulatory and Compliance Complexities

KYC and Anti-Money Laundering (AML) regulations differ from one country to another, making universal adoption challenging. Some regulators require businesses to conduct their own KYC checks, which may prevent them from accepting third-party-verified identities. Striking a balance between compliance and innovation is essential for reusable KYC to gain regulatory approval worldwide.

4. Lack of Standardization and Interoperability

A key barrier to adoption is the lack of standardized protocols. While initiatives like the EU Digital Identity Wallet are working toward a unified system, different industries and regions still follow separate verification models. Without widespread interoperability between financial institutions, fintechs, and service providers, the full potential of reusable KYC will remain untapped.

5. Cost and Technical Integration for Businesses

Transitioning from traditional KYC to reusable KYC requires investment in new technologies, such as blockchain-based identity solutions and decentralized verification frameworks. For smaller businesses and financial institutions, the costs and technical integration challenges may slow adoption.

6. User Awareness and Data Control

As an emerging concept, reusable KYC requires widespread user education and trust. Many individuals are unfamiliar with how it works, how their data is protected, and how they can control what information they share. Without intuitive user interfaces and strong privacy assurances, adoption may take longer than anticipated.

The Future of Reusable KYC: What’s Next?

Reusable KYC is gaining momentum, and the coming years will bring big changes that could redefine how we verify identities. As technology and regulations evolve, some of today’s biggest challenges—like security concerns, regulatory hurdles, and lack of standardization—are already being addressed. So, what’s next for Reusable KYC?

1. A Shift Towards Decentralized Identity 

The future of identity verification is all about putting control back in the hands of users. Right now, too much personal information is scattered across different platforms, increasing security risks. Decentralized identity frameworks, like Self-Sovereign Identity (SSI), are changing that. Instead of institutions storing customer data in centralized databases, users will hold their own verifiable credentials in secure digital wallets, choosing when and where to share them.

And this transformation is happening fast—the reusable identity market is projected to grow from $32.8 billion in 2022 to $266.5 billion by 2027, signaling a global shift toward more efficient, privacy-focused identity solutions. As more financial institutions adopt these frameworks, Reusable KYC will become a natural extension of decentralized identity, making verification faster, safer, and more private.

2. Stronger Global KYC Standards

One of the biggest roadblocks to Reusable KYC is that KYC and AML (Anti-Money Laundering) regulations vary across countries. This means businesses often can’t accept a verified identity unless it meets their region’s compliance rules. But that’s starting to change.

Regulators are moving toward standardization, creating global frameworks that will allow KYC credentials to be recognized across borders. A great example is the EU Digital Identity Framework, which is laying the groundwork for a seamless, interoperable KYC system. As more governments and financial institutions align with global KYC standards, trust in Reusable KYC will grow—helping it move from an emerging innovation to a widely accepted solution.

3. Digital Identity Wallets Will Go Mainstream

For Reusable KYC to truly take off, people need an easy and secure way to store and manage their verified identity credentials. That’s where digital identity wallets come in.

In the near future, these wallets will integrate seamlessly with banks, fintech platforms, government services, and online marketplaces, allowing users to verify their identity instantly—without having to resubmit documents every time.

Imagine signing up for a new financial service with a single tap instead of going through a week-long verification process. That’s the future we’re heading toward. And with tech giants and governments investing in secure, privacy-focused digital identity solutions, Reusable KYC is set to become the standard for identity verification.

Identity.com’s Role in Reusable KYC

Identity verification has long been a slow and repetitive process, but Identity.com is changing that with its developer tools and the Identity.com App—offering businesses and platforms a seamless, user-centric way to verify identities.

Instead of requiring users to submit documents for verification repeatedly, Identity.com enables one-time verification. Once verified, users can securely reuse their credentials across different platforms, reducing friction while enhancing security and privacy. More importantly, users stay in control of what information they share and with whom.

For businesses, the Identity.com App allows them to issue a Verified Identity Pass (VIP)—a reusable credential that functions similarly to KYC but without requiring businesses to store sensitive data. Once issued, users can access their VIP in the app and reuse it across multiple platforms, making onboarding faster and ensuring compliance with regulatory requirements.

In addition to the app, Identity.com provides developer tools for on-chain identity solutions, making it easy for businesses to integrate reusable KYC into their existing systems. These tools support both native UI integration and direct connectivity to the Identity.com App, ensuring a smooth and secure user experience.

Want to integrate reusable KYC into your platform? Get in touch with Identity.com today and take the next step toward a more efficient and privacy-preserving identity verification process.