The Royal Bank of Canada develops an interest in blockchain technology for automating credit scores.
On Thursday, a patent application was released. It outlined the development of a platform on a blockchain that will generate credit ratings automatically utilizing predictive and the historical data of the borrower.
The Content of the Patent
This application will improve the credit rating system since it will utilize more data sources than the current rating systems. The result will be more efficient loan processes and record keeping.
The patent application by the Royal Bank of Canada notes that a more transparent credit rating system will be designed to help people understand how the whole system works. Also, this increased transparency will help individuals improve their scores faster than they currently can.
The blockchain powered system will make a thorough analysis of loan offers based on a user’s existing credit history. This will be done using marketplace information.
The patent application explains:
“There is provision for digital identity and credit records on the system using a distributed ledger. It also has a distributed ledger with many nodes, each one with an identification data that is linked to different identifiers for each transaction data, a hash reference and a timestamp that will indicate when each block was created”.
When an individual submits a loan application, the blockchain-based system will determine the type of loan automatically. The system will also determine what creditor is right for issuing the loan. Subsequently, the system will generate a smart contract with the terms and conditions of the loan.
The system will automate every stage of an individual’s credit rating process using blockchain technology. It is a more transparent and accurate system according to the filing.
However, it is not yet clear if the system will use multiple networks or a single blockchain. Also, there is no assurance that the Royal Bank of Canada will create the system should the patent be granted.