Spring Labs Blockchain Product to Change Modern Loan Systems

Spring Labs, a blockchain startup is working on employing the blockchain technology to leverage the current loan system used by banks, eliminating the need for middlemen.

The Loan Grudge

Spring Labs is looking to be the first company, along with a perceptive few, which are working on using the decentralized ledger technology (DLT) to eliminate credit bureaus and other third parties associated with the robust loan system operated by banks in the United States and abroad.
Banks have not shied away from showing how uncomfortable they are with the current loan system, and Spring Labs new project might just be another major step into mainstream adoption of blockchain in the fintech sector. The current loan system used in the banking sector has credit bureaus like Equifax Inc. and Experian Plc. playing a major role. Equifax and its ilk have now grown to be an important cog in loan grants due to a number of issues steeped in regulations and regulatory bodies.
However, the chief of those reasons might just be the implicit problem of competition. This is where companies like Experian come in, providing a placating solution for all parties involved. Because of certain regulations and stipulations holding banks in place, they are not allowed to share the required customer’s information sufficient enough for a customer to obtain debt. Without third parties like Equifax, sharing of information between banks might breed unhealthy competitions, as banks would try to convince their customers from getting loans from other banks, and would encourage them to do business with them instead.
Another major issue faced by banks is the lack of incentive the current loan system offers. Credit bureaus serving as middlemen receive customer information from banks for free while banks have to buy it have from them instead as a credit report.  This is one major point the new blockchain solution is set to address, according to Spring Labs Chief Executive officer, Adam Jiwan.

“That’s the reason they don’t like sharing with the bureaus, because they give it away for free,” he said.

Test Phase

The blockchain solution has been reported to be appealing to banks and is currently in its testing phase. The current system created by Spring Labs uses a ‘triple blind’ algorithm that ensures the anonymity of lenders and customers. Spring Labs product is now in testing stages with other tech firms such as OnDeck Capital, Avant, Sofi, and Funding Circle and others are set to test the new technology Spring Labs has developed.

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