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DOI: https://doi.org/10.63345/ijrmeet.org.v13.i7.8
Vishal Thadari
Independent Researcher
First Champaign IL, USA
Gaurav Kumar
Independent Researcher
Abstract
The rapid digitization of banking services has significantly accelerated the risk of exposure of sensitive user information, leading to a sudden spike in online banking identity theft cases. Traditional identity verification processes—marked by centralized architecture and reliance on third-party verification—have proven weak in the face of threats against data breaches, replay attacks, and phishing campaigns. While the existing literature has elaborated on cryptographic techniques and biometric systems for identity credential recognition, these processes lack transparency, decentralization, and immutability. More importantly, existing systems hardly provide users with control over their personal data, raising serious issues relating to data privacy and regulation compliance. This study aims to fill this critical knowledge gap by presenting a blockchain-based identity verification system with decentralized identifiers (DIDs) and verifiable credentials (VCs) to enable security, trust, and user control in digital banking environments. By leveraging the distributed ledger nature of the blockchain technology, the suggested system allows for tamper-proof storage of identity proofs and easy verification across banking institutions without revealing underlying sensitive information. The study evaluates how such a system can be made immune to identity fraud using mechanisms such as cryptographic hashing, consensus proof, and smart contract automation. Simulation experiments conducted on Ethereum test networks show improved resistance against impersonation and man-in-the-middle attacks compared to traditional systems. This research contributes to existing literature by presenting a decentralized, privacy-preserving, and scalable identity verification solution in banking applications in line with the principles of zero-trust architecture and regulation compliance like GDPR and KYC regulations. The suggested methodology has high potential to transform identity assurance in the financial services sector.
Keywords
Blockchain, Identity Verification, Digital Banking, Identity Theft, Decentralized Identifiers (DIDs), Verifiable Credentials, Data Privacy, Smart Contracts, Cybersecurity, Financial Technology (FinTech).
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