NatWest, a major British bank, has recently formed a blockchain consortium to streamline home buying in the UK. Digital Asset Live Editor-in-Chief talked to Dan Salmons, Director of Mortgage Innovation at NatWest
Q1: The Forbes report on your blockchain project to streamline home buying states that currently it takes ‘estimated three months to finalize a purchase’. Why so long?
A1: In today’s digital age, it’s frustrating that buying property takes so long. However with multiple parties – sellers, buyers, banks and solicitors to name a few – there are often multiple processes to be completed,all of which must be done accurately and securely. After all a house purchase is often the most valuable and important transaction a customer ever does.
The second problem is that today these processes aren’t connected electronically, introducing duplication and delay. For example before the customer can engage with each party they have to complete identity checks, duplicating what should be a simple process and requiring multiple uploads of paper identity documents.
Delay creeps in whenever there is data shared between parties such as valuation reports or surveys that often require movement of paper.
Finally, the complexity of the processes means that extra information is sometimes needed, and so some steps end up being repeated. As a customer, this means it can sometimes be hard to tell where along the chain your purchase is, and who is holding it up. We think our initiative with Coadjute has the potential to solve all of these problems.
Q2: Which features of blockchain do you rely upon to shorten this time span?
A2: We’re using Distributed Ledger Technology rather than Blockchain (they all get commonly called Blockchain but technically ours isn’t).
What a Distributed Ledger does us significantly improves how and when information is shared across parties in the home buying journey. First, it enables transparency with security: the customer can share their information securely on the distributed ledger to all parties who need it, while still controlling who sees their data.
Second, the distributed model allows us to manage the process, defining who needs to do what, and providing a secure digital record of who has performed what action. It even enables us to identify where data can be used upstream to avoid bottle necks further down in the process.
Third, this all means that for the first time the customer will have complete transparency over where they are in the journey, and if any bottlenecks have occurred.
We think this level of clarity itself will help all participants work more efficiently. It’s better for the customer, as well as for everyone else involved.
Q3: How exactly will your system function? Who will participate in this blockchain? What will they be able to do on it?
A3: Each user on the network will have a different role depending on whether they are an estate agent, a solicitor, a mortgage lender etc. but our key focus for this Proof Of Concept has been to improve the journey for the home buyer.
We are working towards an application that will allow the buyer to apply for an approval in principle from their lender, make an offer on a home, negotiate with the seller, apply for a mortgage, request a solicitor, perform conveyancing, request a survey, and receive their mortgage.
In technical terms, each participant on the distributed ledger (the other software partners in the project) may have chosen to host this POC application differently, however NatWest are hosting their Corda node (the DLT platform the project is built on) in one of their managed cloud services.
Although not integrated into our current mortgage system, as this is a POC, it mimics a similar process to our current mortgage application journey. For now, the application will be tested on a standalone mobile application.
The plan for the future will be to fully integrate with each of the software providers and the mortgage lenders back ends, a build a fully distributed network. As the distributed ledger is built on Corda, it is a permissioned private network.
So although this is very much an open project, and we encourage anyone in the home buying space to participate, the necessary permissions and checks will need to be done before users join the network.
Q4: This year many banks worldwide started their own blockchain laboratories. You chose to enter into a consortium with the leading property software providers. Why did you do this ways, which benefits do you see in the consortium?
A4: This technology is intrinsically collaborative and you need other parties to build out blockchain use cases.
If we had built this alone, there would be little incentive for other market providers such as the estate agents and solicitors to use the NatWest product.
It makes much more sense to involve everyone from the start, and have a fair representation from each of the users in the network. We all have the same goal – improve the journey for our customers and improve how we share and use data.
Our partner, Coadjute, have been instrumental in pulling the key players together and building the consortium network.
I look forward to seeing this expand across the wider marketplace and continuing to drive the change in the property market.
Q5: Together with other members to the consortium, you chose R3 Corda to be the software behind the project. In your opinion, what is relevant in this standard (one of the three most popular) to home buying?
A5: We assess on a use case by use cases basis. In this case, the Coadjute team conducted a research and evaluation project looking at public and private DLT platforms and selected Corda due to its point-to-point messaging system (as opposed to broadcast), which greatly improves privacy and enables scalability.
Our own previous experience confirmed this, and we validated it was a good design choice for this project through some earlier Proof of Concept trials.
Q6: The project develops an app, a companion app to Natwest customers. Will you please elaborate what will a customer be able to do with this app. I am especially interested in new functionalities, not available to the customers at present or those that currently require an effort to achieve.
A6: The aim of the app is to enable a customer to manage their whole home buying experience from end to end. A good example of new functionality is identity. One of the key challenges of the current process is repeated KYC (‘Know your customer’ checks, which are essential for security, but also one of the key pain points for customers. Being able through blockchain to unblock this will be a real success and radically improve the journey. It will actually give greater consistency and security, while also creating a more streamlined service for customers.
Q7: You stated to the Forbes, that you believe the project will be a game changer to the whole property market. How do you think the property market will function when such project as yours achieve mass adoption?
A7: As we are taking leading software providers from the property market on this journey with us, mass adoption luckily won’t be something we need to try and impose, but rather be welcomed. This is another reason why this project needs to be consortium led.
The success of this project will rely on the wider industry being supportive and sharing the vision, which gladly, they do! We hope that the whole property market will benefit from the improvements in efficiency and stronger customer relationships due to their enhanced customer journey.
Through this POC we have also been able to discuss opportunities for data sharing across industry participants that will help streamline each of our business processes internally.