Eight large U.S. credit unions are testing a blockchain-based digital credential system in different pilots ranging from mobile banking to voice banking and even call centers to improve customer experience, Bank Innovation has learned.

This blockchain-based digital credential system is called MyCUID. It was created and issued by CULedger, a credit union service organization (CUSO) established last year to explore distributed ledger technology (DLT) applications for credit unions worldwide.

“We have 27 credit unions right now that are direct investors,” Julie Esser, chief experience officer at CULedger told Bank Innovation. “And 30 more are indirect investors.”

Esser declined to disclose the names of the eight CUs piloting the system. CULedger has raised $10 million in funding to date from its CU investors, according to its website.

At CULedger, Esser describes her role as being “all about the customer experience and how CUs can use DLT to give their customers a superior experience.”

The organization is currently focused on using DLT in three key areas, Esser explained. These areas are digital credentials for authentication, security and customer service; smart contracts for improving lending experiences, credit scoring and onboarding processes; and, lastly, digital value where DLT can be used for creating new types of rewards and loyalty programs.

So far, CULedger has focused on the first area of digital credentials through its MyCUID. To further its development of this initiative, CULedger announced a major partnership IBM last week.

Dan Gisolfi, CTO of IBM’s Trusted Identity platform, said that IBM along with CULedger will create a “permissioned blockchain network that will allow credit unions to share services.” These services will include identification authentication, regulatory compliance around know-your-customer (KYC) as well as services related to lending and payments.

“CULedger has a strong interest in IBM’s KYC offerings,” Esser said. “KYC is a huge compliance burden for CUs. And it’s not just about knowing your customer, but knowing your employees, and your suppliers.”

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Blockchain, due to its decentralized nature, can help FIs with cutting costs, and improving efficiencies around KYC, Gisolfi explained.

As for CULedger’s blockchain network, initial services will be available to credit unions in the second half of 2019, Esser told Bank Innovation.