Spring Labs: Powering the Future of Credit and Identity
Inspiration and Experience
Spring Labs was started by members of the founding team and board of Avant, a lending platform and technology company that has served more than 600,000 customers and originated nearly $5 billion of loans through their platform since its inception in 2012. Through building Avant, the Spring Labs team witnessed first-hand the misaligned incentives and security problems of today’s credit and identity ecosystem. In addition, the Spring Labs team have also founded or grown other large, innovative fin-tech companies including BFRE, Enova, and Future Finance, one of the largest student lenders in Europe.
“Leveraging blockchain technology and our deep knowledge of financial services, we are engineering a fundamentally new way to approach the industry that benefits both consumers and financial institutions with greater data transparency, efficiency and security,” Adam Jiwan, CEO
Spring Network
The Spring Network is being developed as a blockchain-based network which aims to allow lenders, banks, and data providers to securely and efficiently exchange data with one another. Our goal is to revolutionize the inefficient, insecure, multi-billion dollar centralized credit and identity ecosystem that exists today, while solving many of the technology, security, and incentive issues that the team previously faced while building and growing large global fin-tech companies.
“Today’s credit and identity ecosystem lacks transparency and efficiency, causing problems for the banks, lenders, and other institutions that participate in the system, as well as the consumers who are directly affected, but have very little control over the use of their own data,” John Sun, President and Chief Product Officer
A Solution for Consumers and Financial Institutions
Our Solution For Consumers
Consumers have historically had very little control over the use or security of their personal data as it relates to credit and identity within financial services. Despite legislation like the Fair Credit Reporting Act, which was designed to provide consumers with basic privacy protections and safeguards against inaccuracies, more than 20% of consumers still have a “potentially material error” that could preclude them from access to financial services products. Breaches like the Equifax hack of 2017, in which more than 140 million Americans had their credit data stolen, have exposed the lack of control that consumers over the usage and security of their data in today’s system.
The Spring Network aims to provide more control over personal data and significantly more transparency and security than the processes in the identity and credit ecosystem today. The goal of the network will be to allow banks, lenders, and financial institutions to share data directly, rather than through centralized parties, reducing the risky process of data replication and giving consumers more control over how their identity data is managed.
Our Solution For Institutions
The banks, lenders, data providers, and other financial institutions that participate in the credit ecosystem today suffer from a similar lack of control and transparency as consumers. These institutions, for the most part, receive no compensation for their data and retain very little control once it is contributed to centralized providers. For banks and lenders, the threat of data theft and loss of control has historically been the cost of doing business, as access to consumer identity and credit information is necessary for onboarding customers and underwriting financial products.
Additionally, today’s ecosystem features broken incentive structures that have prevented many institutions from participating in the system. These institutions include telecoms and utility providers, which own valuable data, particularly on underbanked populations, that could improve underwriting models with uncorrelated data and increase access to financial services for the 45m Americans (and billions globally) with little or no credit profile today.
The root of the issue is the structure of the ecosystem, which is a hub(s)-and-spoke model that features data aggregators like credit bureaus as the hubs, with consumer and business-facing financial institutions and data providers as the spokes. As centralized hubs accumulate data, they wield significant leverage over the participating institutions, and become bloated with replicated consumer data, which creates a lucrative attack vector for hackers.
The Spring Network is reinventing this hub(s)-and-spoke model with a blockchain-based peer-to-peer model, which will allow participating institutions to share data directly rather than interface only through centralized aggregators. The net effect of the Spring decentralized model is that institutions, like consumers, maintain more control over their data than in today’s system, improving security through a reduction in data replication, and improving the incentive structure by allowing institutions to monetize their data directly and securely. The Spring model is being designed as a more transparent, inclusive, and efficient core network design than the outdated model that has dominated credit and identity ecosystems for decades.
Technical Architecture
The technical architecture for the Spring Network will be outlined in-depth in future blog articles, as well as our community white paper; however, at a high level, our network is a dual-layer blockchain that enables the public sharing of attestations among institutions with added security via a second layer of permissioned nodes that comply with regulatory requirements and facilitate privacy-preserving smart contracts.
Conclusion
The Spring Network represents a fundamentally new approach to the credit and identity ecosystems that underpin today’s global financial system.
Backed by a world-class group of investors and advisors (which we’ll announce in a subsequent post!), we believe Spring Labs is well-positioned to execute and capture an objectively huge market opportunity.
We hope you’ll follow along as we continue to turn this vision for the future into a reality.
The Spring Labs Team,
Adam, John, Anna, Daniel, and Rob
