General Motors Financial Subsidiary Eyes Blockchain to Prevent Fraud

General Motors Financial Company (GM Financial), the
financial services arm of the largest American automotive manufacturer, is exploring
the use of blockchain technology to improve data management standards and help
address critical auto finance industry issues like identity verification and
synthetic identity fraud.

GM Financial has joined Spring Labs’ Spring Founding
Industry Partners (SFIP) program which focuses on researching, developing and
implementing the Spring Protocol prior to its public launch.

Sprincoin Inc., operating under Spring Labs, is the tech
company building the Spring Protocol, a blockchain-based network that enables
network participants to exchange information without sharing underlying source
data. The initial use case for the Spring Protocol focuses on the exchange of
identity, fraud, and risk information among financial institutions to enable a
more efficient, transparent, and secure ecosystem for consumer financial data
than the one that exists today.

The partnership with GM Financial is the second collaboration
of the sort the startup has announced this year. In January, it announced
that 16 marketplace lenders, including leaders SoFi, OnDeck and Avant, have
joined its SFIP program to explore the use of its technology to combat fraud
and enhance their ID verification capabilities.

As part of the partnership, GM Financial will work with
Spring Labs as the startup develops its blockchain products, the first of which
are expected to launch in the first half of the year.

“We came together with the view that we could develop a
series of use cases that would match some of [GM Financial’s] core business
priorities as a lender, or potentially [those of] GM as a parent company,” Adam
Jiwan, CEO of Spring Labs, told
Forbes.

Mike Kanarios, chief strategy officer of GM Financial, believes
Spring Labs’ blockchain protocol could help GM Financial tackle synthetic identity
theft, a type of fraud in which a criminal combines real – usually stolen – and
fake information to create a new identity used to open fraudulent accounts and
make fraudulent purchases.

Synthetic identity fraud and similar deceptions are costing
the company millions of dollars per year in losses of inventory and prevention
costs, Kanarios said. A blockchain-based identity verification program has the
potential to provide a “better, faster and cheaper system” than current
processes, he said.

“As the captive finance arm for General Motors (GM) and one
of the world’s largest auto finance providers, we are continually innovating
and evolving our fraud prevention and detection capabilities to better serve
and protect our customers and dealers,” Kanarios said
in a statement on Monday.

“Today’s announcement underscores our commitment and
investment to advance these efforts.”

GM’s collaboration with Spring Labs isn’t the firm’s first
foray into blockchain. In late 2017, it joined Hyperledger, an open source
collaborative effort to advance cross-industry blockchain technologies. GM is
also a member of the Mobility Open Blockchain Initiative (MOBI), a group
dedicated to exploring the potential of blockchain in the automotive and
mobility space launched
in May 2018. Other members of MOBI include BMW, Groupe Renault, Ford, Accenture,
the World Economic Forum, Bosch and IBM.

Last year, GM filed a patent application in the US for a “method
and system using a blockchain database for data exchange between vehicles and
entities.”

Blockchain use is still in its infancy in the automotive
industry but industry participants are convinced the technology will be a
disruptive force. A study by IBM released
in December 2018 found that 62% of auto executives believe blockchain will disrupt
the sector by 2021.

Among the potential benefits of blockchain in the sector, the
report cites operational efficiencies, improved transparency of information and
transaction traceability. In particular, it identifies finance, supply chain
and mobility services as the areas that would benefit the most from blockchain.