By Glenn Hodgeman on 30th August 2016
Blockchain continues to generate a huge amount of interest and hype within the global capital markets, and now we see something tailored for marketplace and alternative lending coming from Sydney. The use of blockchain (distributed ledgers) provides a new approach for data management and transparency, which will become a solution to many of the inefficiencies that impact the financial industry.
This week saw Othera the business credit and data analytics technology company, undertake live testing of both its Blockchain Lending Platform and Digital Asset Trading Exchange prototype. Both platforms are the creation of John Pellew the CEO of Othera. The company based in the Blue Chilli start-up incubator in the heart of Sydney’s CBD.
I have known John for a number of years now, as he successfully created a credit assessment tool called Othera (used by a number of Australian on-line lenders) and now blockchain for Marketplace Lending. Providing me the technology solution to soon launch a Credit Fund for Institutional investors incorporating blockchain and a funding solution for his Digital Asset Trading Exchange.
For those people not as familiar with blockchain, the concept is about organising and sharing of data. With the goal to create a single version of the truth, containing a much richer set of data than exists in any one system or any one ledger. This single version of the truth held within the blockchain, enables real-time data, immediate settlement of transactions and processing. Obviously the process flow cost savings that fall out of this are immense. This is the reason why banks are pouring huge resources into this technology. But equally blockchain lends itself to solutions across many industries such insurance, law, real estate etc.
Othera’s model is essentially made possible through the use of its two linked platforms.
1. Blockchain Lending Platform as a Service which is used to digitize loans, track the history of the loan and create the digital asset and;
2. Digital Asset Trading Exchange to facilitate the sale of digital assets and drive liquidity in the market.
When applied to marketplace lenders, the blockchain solution could provide transparency, liquidity and yield to those who are a part of the exchange.
Easy to access loan history, right from application, to credit decision, loan agreement and documentation, KYC and finally fully repayment history. All logged on the blockchain and all available to view at the click of a button, essentially giving investors a total view of actual real time risk of the asset. This could mean that buying loans or securitized assets with opaque risk profiles and murky repayment histories could be a thing of the past.
John expects to offer an enterprise version of the lending platform to finance providers and institutional investors within the next six months, across Australia, the UK and US. It is early days, but Othera is already in discussion with ASIC our Australian regulator, a number of marketplace lenders, listed corporates, non-bank lenders, local VC’s and an Australian Investment Bank.
We will see John at our AltFi Global Summit in NY on the 14th September at the Pierre Hotel. He also will be road showing his platforms in London, San Francisco and Shanghai at Devon2. While I expect to see him and his team at the end of February at the AltFi Australasia Summit 2017 to tell the audience more about blockchain and how it might transform the manner in which we lend and manage risk.
Join AltFi for its third annual Alternative Income Forum, exploring closed-ended funds (investment trusts) specialising in generating an income using alternative assets such as specialist finance, P2P lending, direct lending, asset leasing and more. Hear from the leading investors and fund managers in this rapidly growing market.