Applying for a mortgage is a major step in almost any life, and a serious commercial transaction – there’s a lot at stake for both sides, so it understandably takes some time to complete as the necessary checks are carried out. A mortgage broker can help speed the process along, but that means the additional cost of bringing another professional into the equation, at a time when many are already just barely able to meet the financial criteria for their desired home. The reality is that mortgage flows require considerable investment of time, and assessment of various types of document from multiple different sources – many of which are not fully verifiable.
An emerging solution can be found in the use of distributed ledger technologies (DLTs) such as blockchain to enable self-sovereign identity (SSI) in mortgage evaluations – whereby users retain full ownership of their personal data, and thereby full control of it in relationships with other parties. Personal data is held in a digital identity wallet, such as an app on a mobile device, and the individual chooses who to share it with, and how much of it to share. The self-sovereign approach is intended, in part at least, to address two key shortcomings of the alternatives: the inconvenience and inefficiency of the siloed model, where users are obliged to register separately for every service they wish to use, with databases which cannot communicate with each other, and the growing concerns over privacy associated with federated access via identity management outsourcing to social media channels and search engines. User-managed, decentralised identity solutions aim to avoid the need for either.
Rabobank, one of the biggest banks in the Netherland, has been exploring how to deploy blockchain both to improve efficiency and enhance user privacy in mortgage processing, through direct verification of contributing data and their sources. Rabobank has instituted a dedicated Blockchain Acceleration Lab to develop this capability, building an SSI backend for the identity issuer and verifier. “The issuer sends a challenge request to the holder asking for a DID decentralised identifier (DID) for each credential, so they can be revoked independently whilst maintaining privacy,” explains David Lamers, Rabobank’s blockchain specialist. “The holder then sends the DIDs back in the form of self-issued verifiable credentials, encapsulated in a verifiable presentation; the issuer then issues credentials on those DIDs and sends a verifiable presentation back to the holder.” This allows proof to be given that certain criteria have been met – say, income levels over a certain period – without the individual needing to disclose the actual particulars themselves.
Blockchain solutions of this kind are now well on the road to mainstream adoption in connected living – see for instance the GSMA’s latest report on DLTs in IoT authentication processes, and the role mobile network operators can play in facilitating these. Gartner projects that “decentralised identity is making a debut in 2021, and will disrupt traditional methods of access for many providers, as it will be used for 25% of all bring-your-own-identity logins by 2023 – unlocking the value in digital identities and leading to a multi-billion-dollar industry, up from a $50 million industry today.” What may be needed to ensure this, as the range of deployments grows worldwide, is interoperability. “Interoperability is key,” warns David Lamers; “we see a wide range of initiatives and explorations, but if none is compatible with the other an adoption risk will arise.” Rabobank’s app uses a component called Universal Ledger Agent which allows it to store and verify credentials in different ledgers using different credentials; ensuring capabilities of this kind may prove crucial to the global success of DLT solutions.
With the echoes of poor mortgage assessment processes still being heard 12 years after the 2008 financial crisis, improving their efficiency and thoroughness while simultaneously enhancing privacy for the individual is surely and attractive prospect. If interoperability can be assured as more of these solutions come to market, the potential gains are clear. The mobile industry’s global stable of partnerships, richly represented in the financial services sector, positions it well to help ensure that interoperability is achieved – and the GSMA looks forward to facilitating those collaborations in the year ahead.