Blockchain technology came to be the protagonist of the digital transformation process that Argentine companies are experiencing. After jumping to fame for being behind the threads of Bitcoin, the "blockchain" - according to its literal translation - promises to be key to the future of the financial sector.
As iProUP could know exclusively, both public banks and several financial companies are developing through Red Link a system that is based on this innovation, which will allow them to analyze in detail the behavior of their customers and obtain, among other advantages, a robust model of credit approval.Strictly speaking, it is a credit bureau system but much more complete than the traditional Veraz, since it will gather information on more than 7,000 million transactions that are carried out every year through Red Link.
"We are working with blockchain internally and in the development of a superior idea, much broader than a credit bureau," Jorge Larravide, commercial manager of Red Link, tells iProUP.
And he adds: "We aim to take advantage of all the information linked to millions of customers and then analyze the granting of credits according to the behavior of each one. For all this, Big Data is fundamental".
What is big data? It is the analysis of data on a massive level. The volume is so large that the procedures used to find repetitive patterns must be more sophisticated. Specialized software is required to process that material in order to obtain revenue in a timely manner.
As an example, he points out that from the large amount of information collected, certain aspects of the alleged income could be analyzed (in part with the income declared by a person) but above all with the movements that he makes financially, even if not Have it formally declared."Big Data is like our Dead Cow," Larravide emphasizes in dialogue with iProUP, referring to the potential that data science brings today.
"We have access to information of at least 29 million people, plus companies. This, put in value, offers innumerable edges to make a profit and create interesting things for individuals, banks and fintech," the executive is excited.
Red Link is a private equity company that provides comprehensive solutions to 35 entities, among which are all public banks, some private equity and a group of financial companies. Specifically, it provides support for the home banking of 32 entities and supports the mobile and security applications of 24 companies.Blockchain protagonism
The authors of the book "Blockchain revolution", Alex and Don Tapscott, list three fundamental characteristics that this technology has:
- It's public, since everyone can see it whenever they want
- It is distributed, because it runs on multiple devices
- It is encrypted, as it includes public and private keys that guarantee security to those who use it"Strictly speaking, Red Link already has a blockchain network. It has a server that it shares with the Ministry of Modernization and is making progress in the first tests so that everything is much more standardized," a bank manager tells iProUP. public, who is also a director of Red Link.
As Larravide explains, this project goes far beyond a credit bureau, since - supported by Big Data - it will significantly simplify the operation of users.
"The use of data on a massive level is broader than a bureau. The credit part is important, but it is also important to know how each person uses the different platforms and, based on this, improve the offers or simplify processes. There are many things that can be done beyond a credit bureau, "says Larravide.
But there is more: as iProUP learned, this initiative based on blockchain technology will not be limited only to financial institutions. "What we are putting together we will offer to all retailers, those who use Immediate Electronic Payment (PEI), hypermarkets, extra-banking firms or fintech," lists the commercial manager of Red Link.Banks here and the world
Most of the main Argentine banks are already analyzing the benefits that bolckchain technology will bring. For example, in smart contracts and, in the future, in operations such as bank compensation.As iProUP would tell, the entities that stung on tip are:- Supervielle: "We see their use for smart contracts. Our clients could upload them to a digital archive and talk to each other. There are many opportunities," says Eduardo Allende, executive manager of the Digital Banking- Mortgage: "We are considering its advantages to implement it in different businesses," says Guillermo Mansilla, retail banking manager- Patagonia: "We are seeing the infrastructure that supports digital currencies and the specific use that can be given for financial services," says Gerarardo Aguzzi, in charge of Technology- Itaú: received proposals from companies to offer, from the bank's platform, access to bitcoins and other assets. "On issues of innovation, we must choose where to put the focus," says Rodolfo Ricci, Director of Operations- ICBC: this technology will be incorporated into the processes with the companies. "The idea is to analyze how several implementations could be accelerated, such as services with companies," says Gonzalo Díaz Solá, head of electronic bankingIn the world, meanwhile, the most important banks have been making millions of investments to design blockchain systems that allow them to reduce costs and simplify operational issues.
In addition, a dozen entities are investing more than $ 50 million to create a system based on this innovation to apply to transactions. The one who led the proposal on the table was the Swiss bank UBS Group, and its objective is to develop and make more efficient the clearing and settlement systems in the financial markets.
"Blockchain is very interesting for many things. In general, in the world it is used for smart contracts. It is important to keep the history of everything and that nothing can be removed from a chain," says Larravide. "There are many ways in which it can be used, but the most interesting thing is the combination of technologies," he adds.
The Red Link executive explains that the firm is usually analyzing different environments with the most disruptive innovations and then developing models and determining well in what each one can be used.
In that sense, it highlights that there is no specific date for the debut of the system. Rather, the idea is to launch partial applications that provide solutions until everything is finished. "Normally, we don't wait for the project to end, but we are gradually deploying it," says Larravide.
With biometrics, for example, they started with something very specific, which was access through the fingerprint, and then added facial recognition. "Now we have it in some applications, such as the Vale PEI digital wallet, which can be accessed with facial recognition," he exemplifies.
The interesting thing about this method, he explains, is that afterwards a solution can take some aspect of biometrics, with some blockchain, with behavior analysis. "That is put into a model that can be very useful for some business units in industries," he says.What do fintech do
Fintech is also revolutionizing the credit scoring system, thanks also to the contribution of data cross-linking. The financial Moni, for example, has just presented the latest update of its credit bureau based on Machine Learning and Big Data, key for the granting of online loans from an app and immediately.This fintech uses a series of almost 200 alternative factors to analyze and predict in real time the risk profile for each application, since although it deals with people who are banking, the vast majority do not use basic services and, consequently, do not have a history credit at the Central Bank.
"The financial inclusion that fintech is generating worldwide is only possible from a break in the status quo of scoring systems, based on grant criteria that leave out a large majority of the population," highlights iProUP Juan Pablo Bruzzo, CEO of Moni.
"These people, who are generally good payers, cannot be credit subjects in the traditional banking system because they do not have a credit history, which creates a vicious circle that until the arrival of fintech seemed impossible to cut," he adds .
Thus, as explained from Moni, the brand and model of cell phone, the size and resolution of the screen, the access time to the platform, the type of account and bank, the geolocation, the mode of written expression, among others, are factors relevant to establish 10 segments that range from a probability of default of 2.5% to 20% and that automatically determine the maximum amount and term that can be granted to a customer.
Specifically, the new tool is providing countless tools to analyze consumer behavior, anticipate future events or determine their credit status.
From the information provided by Big Data, to the security and simplicity of blockchain technology, advances show day by day that its primary function is to bring solutions to people.