Finance companies will fund more contracts and enjoy easier title transfers through the use of blockchain technology, Chris Ballinger, chairman and chief executive of Mobility Open Blockchain Initiative (MOBI), told Auto Finance News.
Blockchain is a digital decentralized public record used to store transaction data across many computers. A lender’s volume can be improved through the use of smart contracts, Ballinger said.
Smart contracts are computer programs that are able to automatically approve borrowers based on predefined credit metrics. While lenders already utilize automated decisioning tools, blockchain makes the transactions more secure and doesn’t require an intermediator. Smart contracts show how blockchain can streamline “cumbersome processes” captives typically deal with, but at a lower cost through a community database, Ballinger said.
However, in order for blockchain to work, a community ecosystem is vital and the industry hasn’t established one, David Luce, chief operating officer, told AFN. The key to creating a strong community is establishing a single blockchain language for captives, dealers, manufacturers, and lenders, Luce said.
MOBI launched in May to jumpstart the community alongside participating companies such as BMW, Ford, General Motors, and Groupe Renault. EV manufacturer Faraday Future and KAR Auction Services joined last week as the most recent additions to the consortium. Ballinger was the former chief financial officer and director of mobility services at the Toyota Research Institute Inc., but left his position with the OEM to found MOBI.
The Research Institute hasn’t joined MOBI’s consortium as it’s seeking collaboration with MIT Media Lab to explore blockchain technology.
