Credito is building a Credit Intelligence Network for the credit industry to prevent Credit Risk by identifying fraudulent transactions as they happen, allowing the industry to take well informed decisions. Although financial institutions are normally known as one of the most strictly regulated sectors, they are still a target for fraudsters. The consequences of fraud are not insignificant, resulting in financial distress for both banks and customers. While the financial institutions are active in the quest to identify fraud and reduce costs of fraud, they still lack a true global intelligence of all known frauds and compromises.
Credito is introducing a decentralized collateralized lending marketplace and enables connections between lenders and borrowers located anywhere in the world. This removes physical constraints and reduces the traditional lending costs and management fees, thus creating a better credit marketplace than anything available today.
Decentralization provides more security and trust. It is a method to organise anything in a way that does not require trust on third parties. The trust is eliminated by executing code that does not require centralized governance, management, or servers. By decentralizing lending, we do not require banks or any other intermediaries for conducting a loan transaction.
Decentralization through the use of Smart Contracts also removes any trust requirement between borrowers and lenders, providing a trustless and transparent lending environment unavailable in today’s market.
Smart Contracts achieve this through their pre-defined parameters removing the need for trust between participating parties. They are also entirely transparent and viewable by anyone using an Ethereum blockexplorer
Credito brings Financial Inclusion to the “Credit Invisibles” by providing accurate and reliable credit scores.
According to a 2016 report by Nilson, losses from credit card fraud amounted to $21.8 billion in 2015 that’s an increase of 162% from the 2010 figure which was $8 billion. The losses for 2016 are already estimated at over $24 billion, and these losses are expected to reach $31 billion by 2020.
The total value of credit and debit card transactions was $31 trillion in 2015. While the total value of credit card transactions is growing at close to 7 percent a year, credit card fraud is growing at over 16 percent every year.
These losses occur throughout the system, including at the point of sale, at ATMs, and during online transactions. While EMV chip technology has reduced the incidence of in store fraud, it does not help with online fraud.
On the other hand, peer to peer (p2p) platforms are among the fastest growing segment in the financial services space. By Transparency Market Research suggests that “the opportunity in the global peer-to-peer market will be worth $898 billion by the year 2024, from $26 billion in 2015. The market is anticipated to rise at a CAGR of 48% between 2016 and 2024. The market for alternate finance gained popularity in recent years.
While the growth projections for p2p lending are promising, one of the major challenges is providing a system to reduce fraudulent and high risk activities, as they result in loss of investor confidence and trust.
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