Please describe your proposed solution
Context
Globally, around 1.7 billion adults are still unbanked, that means without an account at a financial institution or through a mobile money provider. In 2014, this number was 2 billion [confere https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017%20Findex%20full%20report_chapter2.pdf]. Because account ownership is nearly universal in high-income economies, virtually all unbanked adults live in developing economies. This proportion of people is automatically excluded from traditional bank credit. If those people open their account on Cardano blockchain and could obtain bank credit, it will increase dramatically transaction on Cardano blockchain. The criteria for access to traditional bank credit do not take into account external data to the banking systems. This drastically reduces the number of people who can access bank credit. However, among these two categories of people set aside by the not really intelligent filter of the banks, there are undoubtedly customers of good character, producing values, making transactions, which, taken into account in the calculation of the credit score, would give them a solvency enabling them to access bank credit.
With the advent of cryptocurrency which offers enormous flexibility, freedom, security, decentralization, as well as cheaper fund transfers, many people have opted for this alternative. They produce a lot of values there. The Cardano platform with its ADA cryptocurrency has seen quite a high flow of transactions lately. These multifaceted transactions constitute values for the customer.
Moreover, crypto-currencies do not have a system that is efficient enough to grant credit, the basis for financing projects that are the main levers of development. On the other hand, traditional banking systems have a system for granting bank credit. But only access to traditional bank credit incorporates filters that exclude a good number of solvent people (who produce values not taken into account in the determination of conventional solvency). Transactions made on Cardano's platform would be quite important elements that would give financial institutions relevant arguments to not only improve the criteria for selecting applicants for bank loans, but also allow the inclusion of those who had no access at all to traditional banking services.
Methodology / approch
This will involve providing financial institutions (or any other third-party institution), at the customer's request, with organized multiform information, allowing them to integrate it into the process of calculating the credit score. It is about creating an interactive platform allowing anyone with an account on cardano (Cardano Wallet), to collect, group their transactions information so that they can be used in the process of calculating the credit score and to be able to make it available to the banking/financial institution of their choice. Make banking/financial institutions understand that on the Cardano blockchain multifaceted values are produced and should be taken into consideration in the assessment of the creditworthiness of customers.
The solution will include a client application (web client, mobile application) and a server application that interact with Cardano blockchain. On the client application, the user will be able to access the values he has produced resulting from his transactions on the Cardano blockchain. The server application will be a combination of artificial intelligence and machine learning that will extract transactions of a user on the Cardano platform, process them and organize them in formats desirable by the user and the bank institution. It will make those data available to banks after verification and express authorization by the user via the client application.
How it works?
- From an interface, the user requests the collection on the Cardano blockchain, necessary information that can be taken into account in the calculation of the credit score.
- The application accesses the customer's transactions on Cardano, collects the information, processes it and makes it available to any applicant. This data is updated as the user completes transactions.
- From an interface, the third-party institution inserts the cardano wallet address of his customer requesting the credit and accesses the processed information.
- The third-party institution chooses the format in which it needs the information to be formatted and imports it (many format wil be available: PDF, CSV, TEXT, XML, JSON, etc).
- The import can be done through sending an email, sending it to a file server, downloading locally, to an API end-point, etc.
A use Case
Ewané is a young Plutus developer. He has developed applications on the Cardano blockchain. In his applications, he has integrated smart contracts that take (with the permission of the user) a delta from each user transaction for the benefit of his account. These applications constitute values for Ewané.
Having knowledge of agriculture as the son of a farmer, Ewané would like to diversify his activities by launching an agricultural project. But he does not have the financial means to achieve his goals.
On the Cardano platform, its applications are gradually increasing in value. The interest of users in its applications, the penetration rate of its applications, the evolution curve of the number of users of its applications, the evolution curve of the number of transactions in its applications are growing .
Ewané goes to a bank to lend money to start his agricultural project. Considering only the classic criteria (Payment history, Total amount owed, Length of credit history, Types of credit, New credit) for the granting of credit, Ewané would be refused credit. Because it would not meet several of the conditions considered by the bank. Its solvency would be certainly quite low. However, Ewané is a trustworthy man. Beyond trust, it produces value on the Cardano blockchain. These values could be used as a guarantee to increase Ewané's solvency and allow it to benefit from the credit.
With the application available, Ewané could convince the bank to take into consideration the values he produces on the Cardano platform in determining his creditworthiness. If the bank agrees to take these values into consideration, it will query the application, which will provide it with information on Ewané's solvency based on criteria such as:
- The balance of Ewané in ADA,
- Consistency in transactions,
- The interest that users have in its applications on Cardano platform,
- The penetration rate of its applications,
- The scalability of the number of users of its applications,
- The evolution curve of the number of transactions in its applications,
- The increase in the accumulation of deltas deducted from user transactions,
- etc
Parameters favoring the increase of Ewané's chances of obtaining credit and then financing his agricultural project.
Added value
- For anyone active on Cardano and producing values that can be considered on other platforms is a real added value to the Cardano system. The application allows Cardano to make quite an important feature available to customers.
- The app allows Cardano to contribute to the inclusion in bank credit of people initially excluded by traditional methods.
- The app will drive people to adopt the Cardano blockchain, build loyalty among common users, and help financial inclusion for a population of over 1.7 billion people.
- The application allows banks to integrate values other than those considered by traditional criteria into the credit score calculation process.
- The application will allow Cardano to think about integrating the decentralized credit service into its platform thanks to the results of business intelligence (BI) and machine learning (ML) that will be made available.
The project engages many experts in varying domains:
- Expert in financial domain
- Expert in Computer System (software application)
- Expert in software security
- Expert in BI (business intelligence) and machine learning (ML)
The Plutus Application Backend will integrate a backoffice for managing:
- users and their actions on the platforme,
- financial institution and their actions on the platform,
- cardano transaction data,
- data collected on the terrain for survey,
- etc
and mesure it impact on population by showing the growing:
- curve of the number of persons accessing bank credit who did not initialy get access to bank credit.
- curve of the number of financial institution using the application.
- curve of the number of bank loans granted thanks to the use of the application