Royal Bank Of Canada Wants To Improve Credit Score System Through Blockchain

The Royal Bank of Canada is reportedly planning to explore the application of Blockchain technology to make enhancements to its credit score system.

Martin Wildberger, the Executive Vice President of technology and innovation at the Royal Bank of Canada recently stated that distributed ledger technology will play a key role in facilitating faster payments, lower costs and less complexity. The bank revealed a platform based on blockchain through which it will automatically generate credit ratings using predictive data and the historical data from borrowers. The patent was revealed on Thursday through a patent application which also revealed that the new system will use more data sources than the currently existing credit score systems.

The new patent application by the RBC also reveals that the bank plans to enhance the credit score system so that it will facilitate more transparency in a bid to let borrowers gain a better understanding of how their credit scores are calculated. The Canadian bank believes that a better understanding of how the system works will encourage users to improve their credit scores.

The patent application states that: "In another aspect there is provided a system for credit and digital identity records with a distributed ledger of a plurality of nodes, each node including at least a computing device, and the distributed ledger having a plurality of blocks, each block comprising identification data linked to a set of identifiers for an individual, transaction data, a timestamp indicating when the block was created, and a hash reference for the distributed ledger."

RBC has been developing the new system for the past six months at its Blockchain technology center which is located in Toronto. Wildberger revealed that the technology was incorporated into the bank's systems a few weeks ago as a “shadow” to the bank’s main ledger. He also added that it was the bank’s decision to set up the system as a shadow ledger so as to showcase its leadership in exploring blockchain technology even though it is still in its early stages of adoption.

A lot of money has been invested in the development of blockchain technology, particularly in fintech to make banking applications faster and more efficient. Numerous executives in the banking sector have expressed their belief in blockchain being a technology that will eventually revolutionize the banking industry. Despite embracing the technology, RBC also revealed that it will not operate Canada’s interbank payment system on blockchain infrastructure any time soon because the technology still has a lot of challenges to overcome.