Distory: A cross-border credit history
When you want to acquire a good or a financial service but promise to pay for it in the future, businesses typically look at your “credit history” before accepting. This is the case when you want to obtain a loan or a phone contract for instance. A credit history is a record of timely repayments of your credit card balance and utility bills in the past among other things. Landlords also look at your credit history when you want to rent a property.
The problem in Europe is that if you have a good credit history in one country (say Singapore), you typically cannot show it to a business, such as a phone company, in another one (say, Brazil). One typically has to build a new credit history from scratch in that country.
In other countries, such as Kenya, Tanzania, Uganda and Cameroon, the problem is even acuter: companies who have information on credit history mostly do not share it with a third party entity such as a Credit Reference Agency. When they do, not all of the information may be shared, and it may not be done efficiently.
The ability to assess credit risk is an important component in the pricing of a financial product. Financial theory since Harry Markowitz’s works on diversification has illustrated why it is important that riskier entities pay more for borrowing than less risky ones. Numerous organisations highlighted the lack of a cross-border and cross-financial institution credit history system in Europe and Africa.
Intuitively, a lack of credit history leads to a situation where individuals/companies who could borrow cheaply may not access various forms of credit (bank loans or phone contract for instance). This implies that some mutually beneficial deals may not happen. It can also lead to a situation where individuals/companies who borrow overpay with respect to the risk they actually cause to the company. Both these consequences imply a loss of welfare for individuals and most likely for society in general (individuals, firms and governments altogether).
Therefore, both lenders and borrowers will benefit from improved credit history sharing. Lenders through improved risk pricing and borrowers through both increased access to, and better priced, financial services.
Our proposed solution
Considering these issues, we propose to create Distory: a transparent, reliable and portable credit history. More specifically, Distory aims to establish an open-source cross-border credit history directory using a blockchain (Ethereum).
The way our solution will work, when one (customer or business) repays something, somewhere, a business or another person will be able to see a trusted proof of it anywhere in a fast, easy and efficient way. We use Ethereum’s blockchain to provide a stamp of authenticity to the most vital pieces of information. We aim to provide a solution oriented at performance using RESTful APIs. Careful and appropriate consideration to issues around identity verification, privacy and storage cost has been at the heart of the design of our solution. Failing to address these issues would significantly damage the reputation of our solution.
Our competitors are existing “credit history” companies. We know that the incumbents are currently investigating the option to develop cross-border solutions. We anticipate that it might be relatively hard for existing credit history companies to build cross-border solutions because of the inflexibility of their legacy systems. We are hoping to provide a more efficient solution using the relevant latest technological developments. We also aim to develop a solution that can scale up on mobile platforms as this is important for it to be relevant in Africa.
The key monetisation channel comes from offering a service to businesses. The value for businesses it to find information about the trustworthiness of consumers who do not appear on existing credit history platforms. This is likely to lead to additional and earlier sales.
To find a longer description of our solution, including more details on monetisaton channels and the different steps of the user flow please contact Ben Tannenbaum through his LinkedIn profile (see below).
Our founding team is composed of an economist, a full-stack developer, a financial regulator, a blockchain developer and a commercial salesperson.
- Ben Tannenbaum is an economist with 5 years of professional experience. Ben has a substantial expertise in economic and financial analysis in particular in regulated industries. Ben completed an MSc in Economics & Statistics at the engineering school ENSAE ParisTech and an MSc in Finance & Economics at the London School of Economics. His LSE’s Master of Science’s dissertation was a game-theoretical investigation of the economic rationale of the 2010’s Greek economic bailout. Ben’s Linkedin profile.
- Philip Rowan has 5 years of professional experience in financial regulation, both as a competition economist and in FinTech. He has excellent knowledge of financial sector development and mobile money in developing markets, including through projects at the World Bank. https://www.linkedin.com/in/philiprowan.
- Jacob Czepluch worked at Ethereum on the implementation of the Ethereum blockchain. Jacob now works at brainbot technologies and help companies implement blockchain in their environment. https://github.com/czepluch.
- Pierre Becceril has over four years of experience in user-oriented innovative online services.He is the co-founder of the successful start-up seeusoon (https://www.seeusoon.io/), has won three hackathons and has co-built Whatsbot (AI assistant for WhatsApp), waypay (seamless electronic ticketing and real-time pricing), bandyo (local music discovery app). http://devpost.com/Pie2re.