This interview is part of our new Blockchain In Lending series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and lending.
In this interview we speak with Stewie Zhu, Founder of Distributed Credit Chain, to understand how his company is using blockchain to transform the lending business, and what the future of the industry holds.
1. What's the story behind Distributed Credit Chain? Why and how did you begin?
SZ: After obtaining a MS in Statistics degree from Yale, and a MS in Financial Economics degree from Oxford, I started my PhD program in Finance at LSE. Later, I decided to drop out of my PhD program in search of a tangible solution to the problems I was experiencing with credit and microfinancing. Some issues in the traditional financial industry that are constantly putting a strain on consumers included: high interest rates, low efficiency and profiteering, to name a few.
I tried to analyze these problems from various angles, until I realized that blockchain could be the most comprehensive option. With blockchain, it would be possible to turn the current centralized financial service system into a more efficient, decentralized system, where customers could enjoy an alternative credit evaluation, better data security and lower interest rates, while service providers could acquire new customers more easily. This was the beginning of Distributed Credit Chain (DCC).
2. Please describe your use case and how Distributed Credit Chain uses blockchain:
SZ: DCC is the world’s first distributed banking public blockchain to establish a decentralized ecosystem for financial service providers around the world. Our mission is to transform different financial scenarios and realize true inclusive finance.
In traditional, centralized credit data management systems, users need authorization to access their data. However, in our ecosystem, individual users fully own and control their credit data, while financial service providers can easily and securely obtain the necessary information to evaluate their potential clients.
On DCC’s platform, a user starts the credit management process by signing an application, and the data verifier will then send back the results with an encrypted signature, and submit it onto the blockchain with a summary of the verification. This process enables repeated, rapid and costless verification of the data stored on the blockchain. On the client’s interface, our local data storage framework allows users to encrypt their information with private keys, and store it on the cloud. This ensures data security and makes data inquiries fast and convenient.
To apply for loans on the DCC platform, a user needs to submit an application with a signature. Then, the smart contract on the blockchain enables the lending institution to begin its loan issuance process. During the life of the bond, the lending institution also continuously updates the status of the loan on the blockchain. In the ecosystem, a single report maintains all the loans and applications of an individual user. This report only includes the summarized information of the user behavior without any specific information related to the loan. In this way, we eliminate privacy breaches.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
SZ: Since we are an infrastructure-based company, we enable customers to use our blockchain for lending purposes. For example, BitExpress is a DApp supported by DCC, which enables users to maintain credit data, apply for crypto loans, and maintain loan reports on the DCC chain. User can also deposit their digital assets to earn interest, and collect eco rewards by completing their profile.
4. What other blockchain lending use cases are you excited about?
SZ: There are many projects exploring the innovative incorporation of lending and blockchain. For example, IBM and Twiga Foods work together to provide micro-financing services to Kenyan farmers, so that they can have easier access to capital and thus expand their businesses. Another project, Bloom, provides a blockchain-powered solution for credit data evaluation and storage, which facilitates the investigation process for lenders and thus making it easier for borrowers to get loans.
Given the intense demand, more companies are getting involved in applying blockchain to the lending industry. This is exciting for us as it increases the chances we have for mass adoption.
5. Where will Distributed Credit Chain be in five years?
SZ: Inclusive finance is about transforming the existing system and people’s mindset about its need to change. Blockchain is still in the process of becoming mainstream as it becomes more user-friendly and works out its issues like volatility and scalability. I believe that the application of blockchain is not only about tech upgrades; it’s also about education amongst the general public. The more our society understands about its benefits, the more willing we’ll all be to use it in our life. Once blockchain graduates from its early-stage use-cases, then our customers, partners and the global market can truly take advantage.
We want to make finance truly inclusive and global. After establishing an office in Vietnam and another one in New York City, we plan to enter Indonesia and other Southeast Asian markets in the coming years.