Blockchain-backed financial services start-ups are still finding new ways to provide products and opportunities including loans to those unable to access these services before.
Beyond the other creative applications, it is being applied to, blockchain is at heart, a technology that is all about currency. That includes the financial kind. And beyond bitcoin or any cryptocurrency specifically, the beauty of blockchain for all financial applications is the ability to securitize and assign assets that can be tracked, paid for and assigned via a technology that is not only immutable but secure.
“Born” in the immediate aftermath of the 2008 financial scandals, blockchain today is upending all kinds of lending – from Main Street to Wall Street. Peer-to-peer lending platforms are also still on a global uptick. In just one country where this new kind of access to capital is having a major impact, the UK, over $3.3 billion in P2P loans were facilitated in 2017. That number is expected to continue to rise globally this year, and blockchain is likely to be right in the middle of it.
Peer-to-peer lending, particularly enabled by blockchain, has already begun to make a difference in several types of borrower groups. This includes in the developed world, where individuals and small to medium businesses are frequently unable to get loans from traditional sources. In the developing world, people who are unable to access banking services at all – let alone to get loans – will have access to credit for the first time.
That capability in itself is just too useful and disruptive to be stopped. As a result, in this part of finance, blockchain is here to stay.
FintruX has a long history with disrupting the online finance space. The company was the first to create an online credit adjudication platform (in Canada in 1994). It also has a background of working with reputable funders with billions of dollars already under management. As such it is well positioned to create a new kind of alternative lending marketplace in the form of an automated platform that can administer credit enhanced, peer-to-peer loans.
The FinTruX Network is one of the world’s first blockchain-based online marketplaces for unsecured lending that connects the dots in an environment augmented by specialized servicing agents who can configure and construct each borrower’s (smart) contract in real time.
Cascading levels of credit enhancement help borrowers improve creditworthiness. Lenders are provided with several forms of reassurances that their money will be repaid. Loans are over-collateralized. Local third-party guarantors and cross-collateralization act as an additional kind of insurance.
If it sounds like a digital version of what you always hoped your brick and mortar bank should be when it comes to lending money, you would be right.
And here is the best part: All of this is enabled by a system token which creates not only a fee structure but a tracking device, authenticator, and payment system, all in one place.
Market challenges are actually opportunities when seen through the lens of disruptive technology. In the world of peer-to-peer lending, the inefficiencies that can be solved via this technology are leading to an explosion of opportunity for the right innovative financing solutions. What are those challenges that can be met by blockchained backing?
Small business financing critical to economic growth: One of the reasons that so many small and even medium size businesses are looking to new forms of lending is that cash flow is a critical issue for many of them. Further, such entities have always had difficulty in accessing affordable loans in the form of short-term credit.
Borrowers are inadequately served by current lending systems: Loan underwriting and servicing are expensive in the traditional banking system. It is, as a result, also ill-suited to the needs of small business, who often incur additional fees and penalties as a result of their difficulty in navigating the system.
Lenders have limited options: Believe it or not, lenders who might otherwise lend to both individuals and smaller entities – including private investors – do not have ready access to a pool of evaluated loans, nor a legal structure to allow them to engage in such procedures easily and cleanly. As a result, loan capital has effectively been kept out of the lending market.
The FintruX Network has been created to address such market demands.
Borrowers for the first time, have access to affordable credit. The entire borrowing experience is superior to traditional forms of lending. Clients can also build up a loan history in a transparent and fair system. Access to funding is fast and efficient. And best of all, the middleman and all those fees disappear.
Lenders now have access to reduced-risk investment opportunities with a superior lending experience. Like loan clients, investors can also establish a strong online branded reputation in a network of opportunities. Attractive returns with no upfront costs are also a major benefit.
Oversight is also achieved in a trustless environment but also by the involvement of multiple regulatory agencies and guarantors (not just one).
And it is all possible, literally, by becoming a member of the FintruX Network. Everything is “tokenized” in the network, to create literally, a trusted coin of exchange used for validation, collateralization, and payment.
While there are many possible client scenarios, one of the biggest clients of the service is expected to be existing small business. For example, Jane, who owns an internet company in Vancouver, wants to launch an unbudgeted marketing campaign estimated to cost $20,000. Understanding that the loans on the system must be over-collateralized, she requests a loan from the FinTruX platform for $22,000. She selects parameters offered to her by the platform including interest rates and payment schedules. Jane then must answer a few questions to prequalify, and she is pre-approved. She then uses the services of an online credit check offered by the platform to find her optimal lender.
She selects her vendor of choice, and the loan is transferred to Jane’s preselected bank. She is also now obligated to a monthly repayment schedule. If she pays her loan back on time, she also receives the held back $2,000.
Here are the details of the upcoming FinTruX token sale:
Token name: FTX
Token base: ERC-20 utility token
Token supply: 75 million
Token sale begins: February 7 – February 28
Token sale target: USD $25 million
Token price: 1 ETH = 1,500 FTX