Spring Labs Blockchain Project to Eliminate Credit Bureaus Like Equifax and Experian from Loan Granting Process
The blockchain startup Spring Labs is currently working with 16 different lenders and other fintech companies in order to create a new system for granting loans. The intention is to eliminate centralized firms such as credit bureaus form the loan granting process.
According to a recent report released by Bloomberg, there are different companies such as Equifax and Experian that are now dominant firms in the loan market. In some cases, banks have been struggling to provide loans due to problems related to sharing customer data.
Bloomberg explains that if there are two banks and a client is trying to receive a new loan, these banks will try to convince that customer to choose them instead than the other. Equifax and Experian solve this issue. Another issue is the fact that banks give credit bureaus customer information for free. However, they have to buy this data back in the form of credit reports.
Adam Jiwan, the chief executive officer of Spring Labs, commented about it during an interview:
“That’s the reason they don’t like sharing with the bureaus because they give it away for free.”
He went on saying that several lenders are interested in using a new peer-to-peer system that would eliminate intermediaries and make the industry much more competitive. Blockchain technology could help improve the industry if companies start investing in it. Spring Labs seems to be very focused on offering new services after partnering with 16 firms related to the industry.
SoFi, OnDeck Capital, Avant, and others are ready to test the new technology developed by Spring Labs. In order to protect the information shared, the company has developed a ‘triple blind’ method of information sharing in which the identities of the participants remain hidden. In order to create this service and system, Spring Labs used elements related to cryptography, blockchain technology and also privacy technology.
According to Jiwan, this blockchain project allows the network to be decentralized and it enhances security. It will also be possible to issue digital assets that would allow lenders to share customer information. Although this is still being developed, the intention is to reward lenders that provide client information. In this way, it is possible to reduce fraud and improve the loan industry.
The company is now expecting to launch this service as soon as the second half of the current year.