As technology continues to evolve at an unprecedented pace, we find ourselves facing a growing menace: deepfakes. These sophisticated manipulations of audio and video content have the power to entertain, deceive and disrupt our society in profound ways. Nothing new there - deep fakes have been on the horizon for some years, however innovations in A.I. have raised valid concerns about a sudden tsunami of deepfakes in our midst.

But how much should we, as trustees, care about this?

Some years ago, the wealth industry welcomed regulation which helps to protect service providers from those intent on exploiting the financial instruments we administer for illicit purposes, and from attacking them to gain access to the assets held within. The process for proving that our clients are who they say they are, relies on a wide variety of compliance tools, extensive digital research as well as good internal processes. Even so, many in our industry experience convincing attempts to compromise their business email on a regular basis - it is not going to get easier.

The proliferation of deepfakes such as deep Tom Cruise may be fun to watch but have more serious implications for our industry. The risk ranges from muddying the waters around the creditability of a client by conjuring up new narratives around them and their source of wealth, to reaching new levels of sophistication around phishing attacks.

Amidst these challenges, there is hope. Potential solutions may lie in the innovative field of blockchain technology. Blockchain offers a decentralized and immutable ledger that can help ensure the authenticity of digital assets and transactions. Adapted to this context, it could revolutionize how we establish trust in an increasingly complex digital world.

For several years blockchain developers have been working on the idea of Self Sovereign Identity (SSI). SSI is an approach to digital identity that moves the power and control over personal data away from big-data platforms, such as Facebook and Google, back into the hands of the individual. They decide how they distribute that data, who gets to see it, and how much of it they will allow access to. In theory, being on the blockchain makes the data tamper free, and so we can also envisage the application of SSI to client authentication by institutions and organisations. This ‘single source of truth’ also has the potential to streamline the heavy lifting of burdensome due diligence, which now represents a significant cost for wealth service providers.

An intriguing concept, introduced by Etherium creator and all round crypto Demi-God, Vitalik Buterin, is the idea of Soulbound tokens (SBTs). These can be described as a novel type of blockchain-based protocol representing the commitments, credentials, and affiliations of the token holder. The central concept is about enabling Web3 users to better verify one another and establish a strong link of trust. Unlike an NFT SBT’s cannot be sold, given, or in any way transferred to another person. And being immutable, the data they contain cannot be erased or interfered with. It is perhaps not too difficult a leap to consider that the indelible stamp of an SBT could be used to verify a client’s financial provenance.

The rapid advancements in AI have led to uncertainty over the power it will wield. Whilst there is no ‘ready-to-wear’ solution available just yet, blockchain technology holds great promise in addressing the challenges of the wealth industry posed by deepfakes and in bolstering due diligence efforts. By being open to innovative solutions from non-traditional spheres, service providers can stay one step ahead of malicious actors, protecting their clients and maintaining the integrity of their services.