Soulbound NFTs introduced by Neobank

Neobank Cogni uses Soulbound NFTs to revolutionize banking. The NYC-based financial institution announced it would integrate Web3 technology into its digital banking platform. How does Cogni use soul-bound NFTs to better serve its customers?

How does Cogni Soulbound use NFTs?

Cogni will transfer customer KYC information to NFTs on the Polygon network. These NFTs are “soul bound” – they cannot be transferred from one wallet to another. This feature ensures that users cannot lose and hackers can never steal these tokens.

Embossing the NFTs is optional for account holders. With their consent, the NFTs can be used to interact with Web3 applications and websites. The goal, according to Cogni, is to improve the banking experience for users and transcend the Web2 world of logging into websites with a username and password.

Cogni began offering a crypto wallet in January. Users can transfer, receive and keep Bitcoin, Ethereum and NFTs with the wallet. Unlike most crypto-focused financial institutions, Cogni even offers FDIC insurance to its customers.

Archie Ravishankar, founder and CEO of Cogni, explained: “The reason the crypto-curious haven’t really been able to jump on the decentralization bandwagon is one, obviously, the user experience. The other is trust in the ecosystem. However, everyone knows how to use digital banking.” Ravishankar also added that the crypto wallet is accessible “during the normal banking experience.”

Cogni’s KYC data is “bank level”. As a result, NFT satisfies US KYC regulations and allows users to interact with different dApps without having to fill in personal information for each one. This option will greatly simplify the user experience for Cogni customers.

What are Soulbound NFTs?

Vitalik Buterin, the creator of Ethereum, describes soul-bound NFTs as “non-transferable NFTs that can help represent a person’s identity and achievements in the Web3.” Many industry experts expect soul-bound tokens to be a foundational layer in mainstream adoption of NFT technology.

Some common use cases include:

• Retention of medical records
• Have a membership or ID card
• Digital diplomas and work achievements
• Property deeds
• Mortgage documents
• Birth certificates

Soulbound tokens can essentially be used to add layers of trust and provenance to Web3. Because they are non-transferable, these tokens help prevent bad actors from buying status and misrepresenting their performance.

In addition, soul-bound tokens also help avoid scenarios where important digital assets could end up in the wrong hands. For example, imagine someone steals an NFT representing the deed to your house. This type of situation is a major obstacle to using NFT technology to simplify some existing frameworks. Soulbound tokens will help solve some of these problems.

Cogni Bank is helping to lead the charge into the digital future by integrating soul-bound tokens into its digital banking platform. Customers will be able to use a multitude of dApps and protocols without having to create unique usernames and passwords with each one. These users also don’t have to worry about their KYC data being compromised – the technology behind soul-bound NFTs will keep sensitive information where it belongs.

As time goes on, more people will become comfortable with Web3 technology and soul-bound NFTs will certainly be a big part of this transition.