COLLATERAL RECONCILIATION SOLUTION

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COLLATERAL RECONCILIATION SOLUTION

In this highly competitive banking environment, Banks need to be responsive to the ever-changing customer needs and consistently exhibit clarity and transparency to earn customer Trust. For Banks, collateral management is time-consuming and complicated by lengthy lending workflows.
Dreamztech has developed our collateral management framework for one of our esteemed banking clients to address these complex challenges. To overcome issues with risk and time-sensitive operational aspects, we have used Blockchain as the backbone of this solution that is immutable, decentralized and built on Distributed Ledger Technology.

The Business Problem

  • Bank wants to track Secure Loan – Savings Account as collateral pledge tracking using Blockchain
  • They want any collateral booked on their collateral system should be available as an externally consumable Webservice
  • Objective is to track each collateral as a digital asset since the origination, trail of records and should act as a single source of truth of collateral on blockchain network
  • For any update on the collateral like prepayment of loan amount, an event should be triggered from collateral system and smart contract would capture the event and log the transaction on ethereum blockchain. This would help manage any constraints on the collateral on the blockchain network to maintain 100% transparency with the customers

The Solution

  • Ethereum solidity smart contracts fetch the collateral information from the Webservice using Oracles
  • Contract was developed keeping in mind optimization for minimum gas consumption
  • web3.js & other JavaScript frameworks used to interface with solidity contracts and develop the UI
  • Ropsten testnet along with Metamask used for testing the smart contracts
  • Overall solution would be tracing the end-to-end lifecycle of a collateral
  • Created a mechanism to secure transaction for Hardware Wallet
  • Email notification to the Loan Representative and Customer once the loan Balance reaches zero

THE BUSINESS BENEFITS

Dreamztech developed Solidity smart contracts to interface with bank collateral system. Smart contracts handle events and oracles to query external services. Blockchain based Collateral Management system helped our client to efficiently connect to different banks and their customers, provided full transparency and a real-time view of finances with a single source of truth for mutual verification.