Fintech Companies Link Up to Fight Fraud---Using Blockchain


Photograph by Sasha/Getty Images

Compared with robbing a bank, getting a loan is relatively easy.

Robbing banks is dangerous and you're very likely to get caught. Whereas getting a loan involves paperwork, and if you have the right financial profile, you are likely to get approved. Lenders like to lend, sometimes so much that they will effectively put themselves out of business doing it.

There's a middle ground where lending and stealing meet, which can involve things like banks cooking up phony documentation or people pretending to be someone else, getting a loan and, as soon as the cash arrives, no longer being the person who owes the money.

To combat the latter type of fraud, a group of 16 fintech companies- including platform lenders SoFi, OnDeck, and Funding Circle-have announced they are forming a consortium with the start-up Spring Labs to build a "secure and regulatorily compliant way to leverage data to solve pressing problems related to ID verification and fraud within their respective sectors," the companies said in a press release.

Blockchain is, of course, involved. As is the former president and chief operating officer of Goldman Sachs and former director of the National Economic Council in the Trump administration, Gary Cohn, and the former chairwoman of the Federal Deposit Insurance Corporation, Sheila Bair, who are advisers to Spring Labs.

Broadly, Spring Labs is part of the boringification of blockchain that I've talked about before. The company's grand vision, if it succeeds, isn't the anarcho-capitalist dream of eliminating middlemen from various transactions, it's to be a newer, better middleman. As Bloomberg's Matthew Leising notes, Spring Lab essentially wants to supplant the credit ratings agencies like Equifax.

What's significant about Spring Labs' announcement isn't the product or process it's releasing-that's still in development-but the list of companies that, by joining the consortium, are publicly saying they want it to succeed. (Platform lenders are among the members of the new group.)

Lots of powerful people, investors and companies, in other words, want Spring Labs to succeed. But that's been true of other companies in the boring blockchain space, none more obvious than Digital Asset and its former CEO, Blythe Masters. Like that venture, what Spring Labs is able to deliver will be seen as a bellwether for the viability of institutionalized blockchain in finance.

Square unveils a new debit card for small-business customers, MarketWatch reports. (In related news, Jack Dorsey denies mailing Azealia Banks his beard trimmings.)

China will officially try to extend its Great Firewall to blockchain, the MIT Technology Review writes.

Fintech firms want to shake up banking. And that worries the Fed, reports Reuters.

The hot new job in fintech, Bloomberg's Julie Verhage finds, is someone to deal with regulators.

Write to Ben Walsh at

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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