Blockchain startup Spring Labs has put its first fraud prevention tool into production using an authorized version of Ethereum (here quotation in real time).
More energy efficiency for everyone
The Los Angeles-based Spring Labs firm is now working with two lenders in the Property Assessed Clean Energy (PACE) financing space and hiring two more, said co-founder John Sun.
Each lender now shares borrower and property data through the Spring Labs protocol, where it is tokenized or fragmented so that only the entity that provided the data can view it.
Lenders have been testing the platform since June and believe it could save up to $ 10 million in fraud or 1% of the industry's total loan transactions. PACE loans are used to finance construction projects that make buildings more energy efficient or provide new renewable energy sources for commercial, industrial and private residential properties.
In particular, PACE loans generate bonuses that are repaid by property taxes. Consumers seeking PACE funding usually arrive after being denied an unsecured loan, said Mike Schmidt, chief operating officer of PACE Funding. "We are often their only hope of getting a new roof or air conditioner," said Schmidt.
Why blockchain
Spring Labs' blockchain solution proved attractive to PACE lenders who feared a centralized hub for exchanging data could be another target for contractors who are trying to trick the system, Schmidt said.
Because the data is tokenized or fragmented, sharing financial data is no longer a competitive disadvantage. Spring Labs' ultimate goal is to replace credit rating bureaus and data aggregators by making it possible to exchange data without centralized data hubs, which can be breached and which also makes data sharing more expensive.
Eliminating data brokers is also the same logic that Visa's research and development arm had when it quietly developed a blockchain that allowed banks to exchange customer data without going through data aggregators.
The build-up of constraints isn't the most legally burdensome type of fraud the PACE program faces, but it's a problem that customers are pushing lenders to solve, Schmidt said.
In the future, Spring Labs also aims to provide PACE lenders with more data on bad contractors and more data on PACE borrowers to better determine financial viability, Sun said.
“This is an interesting use case for us to apply our technology,” said Sun. “We quickly built a bespoke data sharing network in an industry that had never shared much information before. We believe this is a safe technology for credit institutions and consumers and with a much lower risk of data loss ”.
