“Data in X”: X=Finance（1）
— — How to perform asset rating more safely and efficiently
“Without big data analytics, companies are blind and deaf, wandering out onto the Web like deer on a freeway.”
— — Geoffrey Moore, Author of Crossing the Chasm & Inside the Tornado
In finance, data is an important fortune. Data collection processing and analysis playing a leading role in all aspects of economic activities.
a) Precise marketing: According to the individual consumption habits, geographical locations, and consumption duration, which include online shopping, field trips, and restaurant consumption, etc. With the help of the data, companies can push relevant promotions to consumers, increasing profits.
b) Risk management: Credit rating and financing are implemented based on the customers’ consumption records and cash flow, helping banks and lenders make judgments.
c) Design of financial products: According to customers’ investment and wealth management behaviors, banks give more agreeable recommendations, improve their financial products and design new patterns which satisfy more needs.
However, during the data processing, we face problems as well such as data fraud and high credibility costs, which hinder economic activities. Fortunately, the rise and development of science and technology have provided strong support for data calculation and record.
Data+Blockchain
Reliable data
The blockchain combines cryptographic hash and digital signatures to connect the history of data change in the form of a chain in chronological order. And through a consensus protocol, all parties involved recognize the data and hold the same copy independently.
In addition, the data is signed and the “fingerprint” (hash) of the data is recorded on the blockchain.
Under the protection of blockchain, even if one maliciously tampers with the data, the others would not recognize it, that is, they would not change their own data copies simultaneously. In this way, malicious behaviors failed, ensuring the security and authenticity of the data.
Smart contract
The clearing and settlement behavior of both parties within the transaction can be written into the blockchain in the form of smart contracts. Once certain trigger conditions are met, the contracts are forced to be executed in time, automatically, which effectively improves the efficiency of contract fulfillment and reduces the cost; The performance process is objective and is not subject to centralized system control, tampering, and termination, ensuring the credibility, safety, and security of the transaction process.
Traceable History
Transaction histories, execution processes, and results of smart contracts, etc. are open and transparent on the blockchain and cannot be tampered with. Everyone can trace the transaction history through the blockchain browser to ensure the authenticity and credibility of data and contract fulfillment.
Take clearing and settlement as an example. In the traditional market, the two parties of the transaction keep separate ledgers, which not only consumes a lot of manpower and material resources but also the reconciliation is prone to be inconsistent due to information barriers. Under the traditional transaction model, the efficiency of clearing and settlement is low.
Under the new transaction model based on the blockchain, both parties in the transaction can share a set of the ledger, with true accounting records and mutual trust, which greatly improves the efficiency of clearing and settlement and reduces transaction costs.
In asset securitization, blockchain is also playing an important role. ABS is a direct financing method by issuing securities in the capital market and monetary market. It is a new type of financing tool for enterprises and financial institutions (banking, insurance, private enterprises, etc.) to revitalize their cash flow. ABS helps companies make the most of their assets and improve production efficiency.
On the other hand, by directly issuing into the monetary market, the financing efficiency is high, the cost is low, and the risk of investors is greatly reduced.
However, in the actual operation of ABS at the current stage, there is still a great technical challenge, that is, how to accurately assess asset risks and dynamically manage risks.
Ø First of all, at the business level, ABS is formed by the packaging and reorganization of multiple transactions and multiple assets. However, the underlying assets of ABS are not transparent, which makes it difficult for investors and related institutions to accurately assess the quality of ABS.
Ø Secondly, at the technical level, the basic data of ABS products is huge. If there is no standard process of data flow, all parties will have great difficulties in obtaining and processing data.
Ø Finally, at the operational level, asset securitization products present the characteristics of complex structure, multiple participants, multiple operation links, and a long transmission cycle. Asset appraisal and capital settlement and reconciliation between transaction parties occupy a lot of manpower and material resources and are inefficient as well.
Combined with blockchain technology, by uploading the underlying transaction information and asset information on the blockchain platform, the transparency of assets is improved, reducing the due diligence of intermediaries and other complex links, and enabling efficient evaluation of the authenticity, legality, and validity of assets.
In addition, through the deployment of smart contracts on the blockchain, the efficiency of financial information circulation, processing, and supervision has been greatly improved.
Contact
Website: https://auth3.network/
Telegram Group: https://t.me/Auth3Network
Twitter: https://twitter.com/auth3_network
Facebook: https://www.facebook.com/auth3network
