Whether the words are actually spoken or not: every job interview comes down to a soundbyte: “What can you do for me?”
This is the same question that lenders will ask of blockchain technology, and there are some compelling answers.
Blockchain technology’s value is comes from automation. Lenders could benefit from automation in the underwriting and origination of loans. These processes are often fragmented and infested with middlemen. Assigning nonessential processes to the blockchain could reduce costs, clutter, and the number of chefs in the kitchen.
Asset-backed lenders dread repossession. Blockchain records can help identify the delinquent owner of an asset, and may also facilitate liquidation of the asset. If a platform can automate the sale of repossessed assets on the global market, lenders could save serious time and money.
Borrowers could also win if lenders use smart contracts to release funds upon loan approval. Under current conditions, this process can take multiple weeks.
Optimists are waiting for the day when blockchain automation reduces that time to mere seconds.
1. Blake Cohen, Co-founder of SALT Lending
“In asset backed lending we think about locating, seizing, and liquidating the asset. Blockchains make each of these operations much more seamless. In the case of blockchain lending, when it comes to locating and seizing the assets, the collateral is already in the custody of the lender, so there is no need to locate or seize it. In terms of liquidation, the process is relatively easy given the market is highly liquid, global, and operates 24 hours per day.”
2. Antoni Trenchev, Co-founder of Nexo
3. Anil Awasthi, VP, Global Head of Retail Banking, Virtusa
“One of the major benefits would be the faster closure of the lending process wherein loans can be disbursed by the financial institution within seconds instead of weeks. This can happen only by having a decentralized business model where trust is established within the blockchain ecosystem. There are several other benefits in the areas of audit & compliance, digitization of assets, transparently managing credit risk and ultimately reducing NPAs of the financial institution.”
4. Darshan Bathija, CEO and Founder of Bank of Hodlers
“The biggest benefit that blockchain can bring to lending in regards to the user is the absence of high rates of interest on loans. This is coupled with the absence of middleman fees as a result of decentralization (through the implementation of smart contracts). Further, blockchain lending is collateralized which means that anyone with relevant cryptocurrency can seek out a specific crypto-backed loan. The risk of defaulting customers is negated by their collateralized crypto-assets”.
5. Alex Mashinsky, CEO of Celsius Network
“The blockchain blazes through borders and tax jurisdictions and propagates the low interest rates available in the US and EU to every person on the planet, this expanded credit and low cost should dramatically increase economic activity and bring the next 1B people into the middle class as they for the first time be able to access cheap capital to build new businesses and develop new ideas.”
6. Anzhelika Osmanova, CEO of Lendonomy
“The number one thing that blockchain brings to anything, including lending, is a possibility for people to interact with each other without having the initial trust in place. When it comes to peer-to-peer lending, blockchain will become a new standard giving more opportunities for people to lend and borrow money cross-borders without expensive transaction fees.”
7. Joe Kelly, CEO and Co-founder of Unchained Capital, Inc
“Blockchain-based collateral is the best form of collateral ever, for three main reasons: 1. You can receive it immediately (no 30-day title closing process, etc.), 2. You can store it rather cheaply (it’s not a Lamborghini or fine art), and 3. There is a 24/7 global market on which you can always evaluate your risk and sell the collateral assets.”
8. Alex Faliushin, CEO and Co-founder of CoinLoan
9. Vitaly Bahachuk, Co-founder of Bloqboard
“The non-custodial nature of blockchain lending facilitates collateral management and maintenance, near instant storage and settlement, dynamic valuation, liquidation, and transparency. This appeals to the operational security minded retail investor and the institutional client using a proper custodian to store their digital assets.”
10. Ed Handschuh, Co-Founder and CEO, 1Konto
“Immutability and streamlining the underwriting process are the largest benefits to the lending process. Many departments and personnel are involved in underwriting, origination and servicing a loan. Being able to consolidate information will quicken the lending process and reduce costs and confusion during the life of the loan.”
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