Over recent years, active penetration of information and communication technologies has created new business opportunities for financial institutions, defining a digital transformation phenomenon. In particular, enhancement of digitalization in customer experience transformation has initiated fundamental changes in the banking sector, bringing disruptive technologies and innovations, and expanding the volume of digital transactions. In a similar vein, there has been an explosion of digital transformation initiatives in Azerbaijan as part of the fulfilment of the “State Program on Expansion of Digital Payments in Azerbaijan for 2018-2020.” Approval of the State Program was a driving force to establish a cashless economy, revolutionizing the digital landscape and digital payments in Azerbaijan.
As one of the priorities of the State Program, the Central Bank of the Republic of Azerbaijan (hereinafter—Central Bank of Azerbaijan) implemented the Blockchain-based Digital Identification System (hereinafter—DIS) to increase financial inclusion and ease digital access to banking services in the country. The main rationale behind this initiative was to ensure full control over personal data and establish permissioned access to data credentials by maintaining the confidentiality and integrity of personal data. Therefore, the blockchain—distributed ledger technology (hereinafter—DLT) was tested in this pilot.
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