Today, Canada remains at the forefront of technological development in areas including transportation, communications, and energy. And in a patent application released on March 15, 2018, the Royal Bank of Canada (RBC) seems all but ready to adopt the world’s newest technology: The blockchain.
Frictionless Loan Assignment
According to the application, the RBC would build a blockchain-based platform that automatically generates credit ratings from the historical and predictive data present for a user.
The proposed application shuns using data from just one credit rating system, and instead uses multiple data sources, thus creating a permanent record and improving the process of loan giving.
The patent application notably works towards creating a transparent credit rating system to help users better understand how the credit scores are calculated.
Based on a reading of the patent application, the system could work by analyzing and using marketplace information based on existing credit histories to process loans.
“It benefits us internally to be more efficient in some of our processes, but that efficiency can directly translate to something the consumer sees,” says Eddy Ortiz, VP of Solutions at RBC
Understanding the patent application
The application explains:
“In another aspect there is provided a system for credit and digital identity records with a distributed ledger of a plurality of nodes, each node including at least a computing device, and the distributed ledger having a plurality of blocks, each block comprising identification data linked to a set of identifiers for an individual, transaction data, a timestamp indicating when the block was created, and a hash reference for the distributed ledger.”
Based on the submission of a loan application, the type of loan to be given is automatically identified by the system. After this, the loan terms are automatically generated using a unique smart contract.
Simply put, every step of the credit rating process is automated by the blockchain system, thus creating a fully-automated, yet transparent system.
While most institutions are exploring internal use cases for the technology, RBC is just as focused on solving consumer client problems.
RBC Historically Bullish on Blockchain Technology
Earlier this year in January 2018, Mitch Steves, a capital markets analyst with RBC, stated that blockchain and cryptocurrency is potentially a $10 trillion ecosystem.
“While the cryptocurrency space has many risks, the opportunity appears vast with constant technology updates,” said Steves.
Although many blockchain startups are focusing heavily on cryptocurrencies to serve as a decentralized means of remittance, Steves believes that most of the ecosystem’s value lies in the protocol layer (on which these services will be built).
What do you think of RBC’s decision to implement the blockchain? Is this is a sign of improved mainstream confidence? Let us know in the comments.