Figure uses Provenance Marketplace to launch the first institutional marketplace for digital loans. Bilateral settlement, real-time loan performance, and T+0 primary and secondary trading.
Watch the video to see how it works.
Overview
Provenance is a distributed, proof of stake blockchain designed for the financial services industry.
Banks, funds, asset originators and technology companies use Provenance for loan origination, servicing and financing, marketplace trading, fund custody and administration, banking and payments, and private company cap table management.
Provenance reduces third party intermediation and internal staffing costs, promotes greater transparency and liquidity and allows for new kinds of financial engineering and business opportunities. The goal is that any firm using Provenance benefits from the blockchain, and pays ⅓ of that benefit back in fiat currency back to Provenance.
For example, Figure saves over 51 bps in originating, custodying and servicing loans on Provenance. It pays 17 bps on each loan onboarded to the blockchain, netting 34 bps of value. Provenance could unlock $200B each year or more in value for the financial services industry.
Marketplace
Provenance Marketplace connects buyers and sellers of digital assets. Over $1 billion in digital assets have traded on Marketplace.
Marketplace is like a town full of stores. Each store has products for primary and secondary offerings. Some stores require accreditation to enter and transact. This accreditation is often done through Figure’s Passport solution. Today Marketplace supports loans, loan participation and private funds. Soon Marketplace will support a full range of securities, from asset-backed securities to private equity.
Marketplace allows two counterparties to trade bilaterally, settling real-time without counterparty or settlement risk. Passport allows investors to provide information for identification and automated accreditation one time rather than for each investment. Together they allow unprecedented access, ease and transparency to asset and fund interest buyers and sellers.
Marketplace Example
Figure Loan Marketplace
Figure uses Marketplace to offer and provide a secondary market for its HELOCs.
Figure releases pools of Figure HELOCs for bid wanted in competition (BWIC). Interested banks, funds and other institutional buyers can login, diligence the collateral, review the loan purchase agreement (LPA) and submit a bid. The winning bid has 24 hours to sign the LPA and fund the purchase. Loans can be re-offered in part or whole back into the marketplace, giving buyers potential liquidity.
The benefits of marketplace to Figure include:
- Comprehensive electronic loan documentation
- Real-time performance information
- Real-time remittance
- Real-time bilateral settlement
- Reduced custody and servicing expenses
- Secondary market liquidity
Visit Figure, see how their marketplace works, and sign up to bid on loans.
Contact one of our integration partners about creating your own marketplace for loans, subscription interests in funds, and other relevant assets.
Loan Origination and Financing
Firms like Figure have captured significant cost savings and efficiency improvements using Provenance.
The distributed, trustless and immutable characteristics of the Provenance blockchain minimize costs from intermediaries, automate inefficient operational processes, reduce risk through data reliability, and enable innovative new products.
Provenance adds value in 4 key areas:
Provenance enables digital asset origination, minimizing costs from intermediaries, automating inefficient QC and audit functions with smart contracts and recording authenticated loan data on the blockchain registry.
Provenance reduces cost and friction in warehouse financing, enabling daily pledging of assets, and reduced staffing expense through smart contracts automating diligence and monitoring of facility terms.
Provenance removes friction in loan sales through bilateral T+0 settlement, authenticated data, and automated diligence with smart contracts.
Provenance automates loan servicing, remittance and reporting with smart contracts. The blockchain ledger facilitates real-time reporting of verified servicing data to asset owners.
Loan Origination and Financing Example: Figure HELOC
In March 2020, Figure completed the first blockchain-based asset backed securitization, realizing over 100bps in savings and benefit.
Read how Figure leveraged Provenance blockchain to reduce third party costs, improving staffing efficiency and improving transparency and liquidity on its ABS issuance.
Contact one of our integration partners to explore how Provenance can reduce your loan origination, financing, servicing and trading expenses.
Digital Fund Services
Provenance is revolutionizing how private funds are digitally issued, accessed and exchanged.
Provenance is revolutionizing how private funds are digitally issued, accessed and exchanged. The Digital Fund Services offering is an end-to-end application for the digital issuance of private funds on Provenance.
Key features and benefits include:
Passport
Securely and confidentially verifies investor accreditation and performs KYC/AML/BSA checks on global individuals and entities. Investors can leverage their passport for multiple offerings on Provenance eliminating redundant processes.
Liquidity
Improves liquidity profile of illiquid funds through bilateral secondary trading of fund interests with real time settlement while eliminating high search and transaction costs of current secondary markets.
Marketplace
Enables the discovery, issuance, purchase, transfer and redemption of digital fund interests by marrying investor passport data, fund compliance and regulatory guidelines.
Ledger
Captures all investor-level fund activity (cash flows, ownership) in an ‘undisputed chain of truth’. Provides seamless subscription and capital operations and settlement. Enables the frictionless distribution of fund proceeds and redemptions.
Registry
Creates a secure and immutable record of investment ownership, terms and fund details, simplifying document management for LPs and GPs.
To read more about the impact Provenance can have on the private fund industry, read our white paper.
Digital Fund Services Example: Colchis Marlette Funding Trust
Using Provenance, Colchis has been able to reduce annual fund custody expenses for one of their income funds by over 67%.
They are now looking to use the secondary market feature to allow investors to trade fund interests, bringing potential liquidity to the market.
Contact one of our integration partners about using Provenance for fund custody and administration.
Banking and Payments
The blockchain allows for real-time, bilateral settlement of payments between P2P, B2C, and B2B.
Provenance supports payments transactions through omnibus bank (national bank) partnerships. This process is cheaper and faster than interchange, without the chargebacks.
Merchants can benefit from eliminating issuer interchange and chargebacks, earn new revenue when members transact with other merchants, earn brand and enterprise value in the merchant challenger bank, and create positive social impact in a sustainable, with a fair banking and credit solution for the unbanked and underbanked.
Banking and Payments Example: Cara
Cara is transforming payments using Provenance blockchain
Cara is a private-labled biometric-based finance application that allows retailers to offer a full range of banking services to their customers without becoming a bank. Cara supports both interchange and blockchain rails.
Merchants using Cara benefit from the elimination of issuer interchange and chargebacks and earn new revenue when members transact with other merchants. This builds brand and enterprise value in the merchant challenger bank, creating positive social impact with a sustainable, fair banking credit solution for unbanked and underbanked.
Key functions of Cara:
Cara is a private-labeled, biometric-secured comprehensive banking and payments solution built on Provenance blockchain. It supports bilateral, real-time member-to-member payments, including merchant transactions through QR or NFC.
Cara transactions settle immediately - same as cash - with no chargebacks and de minimis fees for a merchant’s own customers.
Cara members, including merchants, can redeem stablecoin to fiat through ACH, wire, check, etc.
Cara provides point of sale credit for members (including thin file borrowers), using both push notifications (when the member enters the store) and credit requests; credit performance is sent to the bureaus to build member’s credit file.
Cara can be used for payroll (same day pay with geolocation time clock), loyalty programs and other services.
Learn more about Cara, including how your firm can use Cara to offer private-labeled banking and payment solutions.