A trio of Indian government-sanctioned companies built a blockchain network to ensure that if a borrower obtains a loan via one of them, the other two will be notified to avoid duplicate lending. It’s part of an exchange platform they created to bring lenders together with borrowers. The group built their blockchain network using the Linux Foundation’s open source Hyperledger Fabric.
It’s notable because the Hyperledger code is running in a production environment with three competing institutions all using the same blockchain network. It was built by Hyperledger member MonetaGo.
The financial exchange system provides a common platform not controlled by any one financial institution to share information, which reduces fraud. The Reserve Bank of India licensed the three private companies to create the platform to facilitate small business loans. The three exchanges are RXIL, A.TReDS, and M1xhange. These exchanges count some of the biggest Indian banks and a number of foreign banks as funding sources. The companies hired MonetaGo to help them build the blockchain element of the platform.
“It makes for a more efficient system,” said Brendan Taylor, CTO of MonetaGo. “You can get quotes from multiple funding sources.” He said these financing exchanges are a big industry in Europe and relatively new in India.
The key thing that the blockchain brings is a mechanism for sharing information without sharing specific identifying data of a client or loan transaction.
“Our clients are particularly sensitive about their sourcing inputs, and we absolutely could not broadcast any of their private information to a shared network,” said Kalyan Basu, CEO of A.TReDS, in a statement. “This technology enables us to work together with the other exchanges to achieve shared goals without sharing specific data.”
Taylor explained that the blockchain creates digital fingerprints. “We hash all the invoice details and share that digital fingerprint among the exchanges,” he said. “You can’t find out what this digital fingerprint relates to unless you had the legal identifier. No secret or private information is shared among them at all.” The technology not only identifies when an exact duplicate has been financed, but even when a similar invoice has been financed to further reduce fraud.
“This is a unique deployment in the sense it is not a pilot, nor a parallel process,” said Taylor. He explained that a lot of blockchain networks are being run as a parallel process because there isn’t yet enough confidence that the technology will work well enough. “There are very few production blockchains out there that have participation from multiple competing participants,” he said.
Brian Behlendorf, the executive director of the Linux Foundation’s Hyperledger blockchain project, said, “There are about a dozen production deployments of Hyperledger now, and 2018 is the year when this stuff is being run in production. This news is great reinforcement of that fact.”
For the MonetaGo blockchain, the nodes are hosted at two separate cloud providers’ facilities in India. “One of the hurdles we come across is there are still very few people familiar with the systems administration around maintaining blockchain networks,” said Taylor. “This is still very much a cloud-hosted environment. If we had to maintain those nodes on premises for clients, it would be difficult to do.” He acknowledged that some banks were a little uncomfortable about hosting their private data in cloud environments.
As a side note, Behlendorf said that about 80,000 people have now registered for the free online blockchain training course — Blockchain for Business: An Introduction to Hyperledger.