Blockchain technology can be used to create registers to track ownership and related finance of assets like cars, and prevent and track fraudulent sales and practices, according to Haskell Garfinkel, a partner at PricewaterhouseCoopers and the firm’s co-leader in Fintech practice.
During a keynote presentation at the American Financial Services Association’s Vehicle Finance Conference in Las Vegas, Garfinkel provided an in-depth explanation of blockchain technology and its potential in the auto finance industry.
“The power of the underlying technology of bitcoin is … that bitcoins, unlike dollars, can’t be counterfeited. Nobody ever has been able to replicate a bitcoin,” Garfinkel told the audience. “So the underlying technology that has been behind this stuff is pretty powerful… and can be used in many, many different ways.”
Blockchain can be applied to lots of industries and has a considerable number of possible use cases in trade finance, for health records, for voting, as well as in supply chain management.
“The ability to monitor things, the provenance of things like artwork, all the way down the supply chain; the ability to know the identity of counterparties, are areas where people are spending a lot of time in. That’s an impact on the industry,” Garfinkel said.
A London-based startup named Everledger is using the technology as an immutable database for diamond identification and transaction verification for various stakeholders. In this case, blockchain technology helps make supply chains more transparent, allowing for the tracking of high-value goods, and thus, helping to combat fraud and counterfeiting.
For the auto finance industry in particular, blockchain technology can be used in ownership tracking and vehicle titles.
“The best news about this technology is that it will enable lenders to lower operating costs and possibly legal costs,” said Georgine Muntz, CEO and strategy leader at defi SOLUTIONS.
In June, Toyota Financial Services joined R3’s consortium to explore distributed ledger technology for potential applications in auto financing. According to Chris Ballinger, the firm’s CFO and global chief offer of strategic innovation, blockchain “will ultimately lower costs, increase efficiency, and make auto finance more transparent.”
Still in the early days
That said, blockchain technology is still in its infancy, Garfinkel told the audience. “We are just starting to see some of these technologies going into production, but we’re not there yet,” he said.
Garfinkel continued:
“I cannot tell you exactly how this is going to be applied in your business right now, but this is when it makes sense to start thinking about how to apply these technologies into your business …
“What I can do is start by telling you that companies like Arcade City are already gaining traction in the ride sharing world. That people are already looking at [blockchain] processes and systems; like the world of underwriting, the world of credit reporting, the world of payments, are starting to get a lot of traction in the world of blockchain.”
Based in Austin, Arcade City has created an open marketplace between drivers and riders and intends to compete against the likes of Uber and Lyft. Arcade City takes 10% of the rides paid through the app, which confirms transactions using the Ethereum blockchain but also allows drivers to establish their own forms of financial transaction.
Garfinkel is confident that blockchain will have an impact, not just on financial services and the auto finance industry, but on many other “areas of ourselves, much like the early days of the Internet.”
“This is definitely an area where I think people will wake up in a few years and say ‘I’m glad I spent some time on this early, I’m glad my IT department started investigating, running proofs-of-concept, keeping an eye on the innovators in this space, and integrating these technologies into my organization.'”