Podcast 238: Adam Jiwan of Spring Labs

The way we have stored and used credit information has not fundamentally changed in decades. The big three credit bureaus each have massive databases of personal information on everyone with a credit file. But as we have seen in recent years this is not the best and certainly not the most secure system.

Our next guest on the Lend Academy Podcast is Adam Jiwan, the CEO and founder of Spring Labs. Spring Labs is working on a completely new system for credit and identity information. This is a system that is decentralized, real time, blockchain-based and secure. They already have dozens of lenders signed up and they are looking to go into production later this year.

In this podcast you will learn:

  • The major issues with consumer financial data today.
  • How Spring Labs is trying to enable sharing of financial information directly.
  • An example of how this will work in practice.
  • How the Spring Network ensures privacy and security of financial data.
  • Some of the leading lenders who have signed on already.
  • Why they refer to themselves as an Un-Bureau.
  • How they interface with the big three credit bureaus.
  • The blockchain technology that underlies the Spring Network.
  • The different verticals they are focused on today.
  • The new products they are looking to deliver this year.
  • Where they are at on the road to implementation.
  • When they expect the trading of data to begin with their partners.
  • The number of employees they have today.
  • How Spring Labs’ business model will work.
  • How they were able to get big names like Gary Cohn on their advisory board.
  • Adam’s perspective on the future of personal credit data.

This episode of the Lend Academy Podcast is sponsored by LendIt Fintech USA 2020, the world’s largest fintech event dedicated to lending and digital banking.

Download a PDF of the transcription of Podcast 238 – Adam Jiwan.

PODCAST TRANSCRIPTION SESSION NO. 238–ADAM JIWAN

Welcome to the Lend Academy Podcast, Episode No. 238, this is your host, Peter Renton, Founder of Lend Academy and Co-Founder of the LendIt Fintech Conference.

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Today’s episode is sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. It’s happening on May 13th and 14th, 2020, at the Javits Center in New York City. Lending and banking are converging and LendIt Fintech immerses you in the most important trends of the day. Meet the people who matter, learn from the experts and get business done. LendIt Fintech, z and banking connected. Go to lendit.com/usa to register.

Peter Renton: Today on the show, I am delighted to welcome Adam Jiwan, he is the Founder/CEO and Chairman of Spring Labs. Now, Spring Labs is a relatively new company that has only been around for a couple of years and they have big audacious goals. I wanted to get Adam on the show to talk about these, they’re really looking at re-tooling how personal data gets shared, how it gets stored and how companies verify information on consumers and small businesses.

We go into that in some depth, we talk about how it works, go through an example, it’s somewhat complex, but Adam’s been able to explain it in pretty simple terms so anyone can understand it. We talk about where they are in the process of getting out to production, talk about the different partners, some of them they can share publicly, and we also talk about what his vision for the future of credit data is. It was a fascinating interview, I hope you enjoy the show.

Welcome to the podcast, Adam!

Adam Jiwan: Thank you for having me.

Peter: My pleasure. So, I wanted to get started by just giving the listeners some background. You’ve had an interesting career with a variety of different companies, it looks like, so why don’t you tell us what you did, give us some of the highlights before Spring Labs.

Adam: Sure. So, for nearly 20 years, I’ve had the opportunity to develop my career at the intersection of business building and investing in financial services. Through the course of these experiences, I got to assist in the development of the real estate finance industry in Brazil, help introduce student finance in Europe as a Co-Founder and Chairman of a company called Future Finance, backed a myriad of online and innovative financial technology companies in the US, including being one of the largest seed investors of Avant, now Amount.

In all of these different experiences at either, I came to appreciate that in the digital era, data is a lifeblood of any financial institution, but I think that’s probably pretty well understood that, you know, data is the new oil, as it were. But slashing beneath the surface, really came to develop an understanding of the underlying plumbing, i.e. where is these data relating to credit identity come from, who owns it, who has the right to it, where did they get it from, who shares it, who doesn’t share it, why and why not. And, in that plumbing, my partners and I saw significant amounts of fragility and frankly, a number of things that we found to be quite broken.

Peter: Okay. So then, you found things were broken and then what were the steps involved in really founding Spring Labs? How did the idea kind of come about exactly?

Adam: Sure. So, just at the highest level, let me just share with you what Spring Labs is all about.

Peter: Okay.

Adam: We’re trying to reinvent how information is gathered, shared and monetized in the financial services industry by deploying decentralized infrastructure, and we hope that will drive much greater accuracy, much greater security, much greater consumer privacy. In doing so, frankly, we think we can actually make a dent on things like, you know, financial inclusion, and we came to this, to answer your question, because we were lenders ourselves and we were ingesting vast amounts of data to do things like identity verification, as well as credit worthiness.

And, where we were gathering these data from, we saw a system that had a number of issues and let me just run you through what these issues were. Again, we saw security being a major issue, we saw that accuracy was a major issue because the participants in this ecosystem are, generally, a pretty narrow set of retail lenders. So, a lot of the information that you might actually see on a traditional credit report, they don’t actually include things like your assets, or your income, or alternate forms of credit performance data. If you are renting, do you pay your rent on time, do you pay your utilities, or your insurance, or your subscriptions on time, so accuracy was an issue.

We saw a system that was very vulnerable to fraud, especially from the more pernicious forms of fraud like synthetic identity fraud, meaning fraudsters could not only just take data out of these databases and let’s say credit bureaus and others, but they can actually stock synthetic files into those same places which can create significant vulnerabilities for lenders such as ourselves. And then, we also saw a real misalignment of incentives, as you likely know the most valuable businesses in the world today are the business of hoarding private data about each and everyone of us and monetizing it, and it’s no different within the credit and identity world.

Centralized data aggregators are in the hoarding data business, and so when they want to sell it, for instance, to a financial institution let’s say for identity verification, they don’t provide all of the underlying data itself, they don’t provide the provenance of that data, they don’t provide linkages of where that data was seen with other pieces of data. They, basically, give you a score on the probability of thumbs up, thumbs down because they don’t want to lose on to their precious oil. So, we saw misalignment of intentions because we, as a financial institutions, or lenders who are in that business, want the most granular information possible to inform our models to actually make the best risk decisions we could for our companies.

And then finally, the way the system works today, there’s very little respect for consumer privacy. There’s a vast amount of sensitive personally identifiable information that moves around anytime anyone applies for any product because so many different verifications need to take place on a point-by-point basis. So, we saw a system that was not only fragile, but had a number of significant issues and we wondered to ourselves whether there was a technology, frankly, that could be brought to bear to deliver the elements of an ideal solution.

Peter: Right, that makes sense, and not to even mention the hacks that have happened where the exposure of all this data has gotten into nefarious hands. So, that’s another……

Adam: Absolutely, and that’s what I meant by security which was my first point was exactly that, which is, if you’re in the hoarding business, you are taking vast amounts of sensitive information, putting it into a database, that database grows ever larger and represents an incredibly juicy attack factor. The truth is, the moat around that database, no matter how wide, can be breached because once you break into the filing cabinet, you’ve got everything, right. So, we believe that there needs to be a fundamental re-thinking on security architecture, again, in order to create a much sort of safer ecosystem for both consumers, frankly, and lenders.

Peter: Okay. So, let’s dig into that, let’s dig into exactly what you’re trying to do here. Maybe you can try and explain in as simple terms as possible what Spring Labs is about.

Adam: Absolutely. So, we’re trying to transform how information is exchanged within the financial services industry with security and consumer privacy as paramount considerations. So, we are developing a network that is an information exchange, and so, what we are trying to enable is financial institutions and others that have credit-relevant, or identity-relevant information to share information with one another directly, i.e. not mediated by centralized data aggregators, or credit bureaus, or the like, i.e. just share with one another and when they do the exchange of information, they receive value.

In the current system, there is what we call a “Give to Get” model which is retail lenders today give away their hard earned credit and identity data for free to many of these centralized aggregators, like the credit bureaus, because they can’t share information directly with their competitors. So, they share it with this little man who aggregates the data together and resells it right back to those same lenders that gave it to them.

And so, it was a wonky system when we were in the lending business, we really disliked it because we lost ownership and control of our credit and identity data, and so with the Spring Labs sort of network we were trying to foster the enabling conditions, or direct sharing among institutions which means that there needs to be a flow of incentives.

So, if an institution is sharing information, they’re not giving it away for free, they’re recruiting value, number one. Number two, they’re dealing with very high security and secure privacy assurances. So, for instance, Personally Identifiable Information does not leave the firewall of participating institutions in our network, and from a security perspective, again, plain tech data is not sort of shared within sort of like the network and that doesn’t mean that it’s restricted, it ends to be hashed and faulted and we use the series of anonymization technology, again, to address the competitive sensitivities that have prevented this work sharing in the past. To go to your question about an example, though, I think that might be very useful.

Peter: Yeah, for sure.

Adam: So let’s say, Peter, you were applying for a product prior to sort of the Spring Network, you’re applying for a new credit at J.P. Morgan. The first thing that J.P.Morgan needs to do is verify you’re the person you’re purporting to be and they typically do that by not just doing it manually, but going to a number of vendors. So, that could be a new store, it could be a credit bureau, and, again, let’s use the simplest example where they’re just trying to verify one identity field, your phone number.

So, they typically go to a party and ask, is Peter’s phone number X, and that party because they don’t want to give the financial institution underlying data itself, typically, will say, thumbs up, thumbs down with a probability score and this could be true across a number of identities, or other factors as well. And so, the challenges with that system are several, the first is, you’re relying upon one party. That party can be compromised, meaning, someone can change literally what’s in the database that could be overwritten, i.e. think about synthetic identity fraud.

The second is…the most pernicious forms of fraud that exist today often take place by stitching together real identity factors that are for real people with a fraudulent bank account. So, if you’re just doing point-to-point on a single identity factor, you’re missing granular information, linkages among information, i.e. where was that phone number seen, with what address, with what IP address and with what bank account, you’re not getting that information and you’re not getting the provenance of that information, i.e. how, when, how did that data aggregator get that information. So, that’s the old system.

Under the Spring Network, we employ an entirely different concept which is rather than going to a data hoarder, you ping the network and let’s say 30 different institutions, many of whom might be regulated through permission, who had an experience with Peter and Peter’s phone number. And, without actually revealing your phone number because it’s hashed with an entity factor and without actually using any of your PII, those certified institutions that may have had an experience with you, within say the past six months, can come back and say, yes, what we have matches what you have, number one.

Number two, we’ve actually seen it with the following and other identity factors with the following problems, so let’s compare scenario one with scenario two. In scenario one, you’re relying upon one party for what’s true and that party can be compromised. In addition to that, you are not obtaining the underlying granular information, linkages with other identity factors, or the provenance to that information.

In the second scenario, you’re getting the benefit of multiple parties attesting to the veracity of that piece of information, you’re obtaining the granular information, the provenance of the information and the linkages of the information driving what we believe is much greater accuracy.

Similarly, in that verification case, Peter’s, PII, for instance, is never leaving and never crossing on the network. As such, it’s actually system is fundamentally more secure and it’s one that actually we should respect, Peter’s consumer privacy, which we think you have a right to.

Peter: Right.

Adam: So, that’s a very simplistic illustration of the world before the Spring Network and the world after it as we envision it.

Peter: Right. Just so I’m clear, you’re not taking any data, you’re really enabling connections between the pieces of the network, so the data, there’s no central depository because each of the 30 parties, you said, have their own….they’re pinging their own database internally. So, you’ve obviously written code that enables them to do that and so there’s no PII going back and forth.

So, basically, this seems like a far better system because…I mean, the biggest thing is, the way I look at it, there’s no central repository and everything, I imagine….all these databases are also being updated in real-time. So, your credit report, you know, it still doesn’t get updated in real-time whereas….maybe you can comment on that, is that the case?

Adam: You’re absolutely right. About a couple of things. The first is we are not a centralized repository of data because that would create another attack vector, right. Rather, we are the pipe, or the plumbing, or the infrastructure that connects all of these parties together to enable them to share information and value with one another.

So, if you think about our business model, it’s something that came to a Federal Express, right. Federal Express mediates the exchange of packages and value, but Fedex doesn’t open those packages, they don’t retain those packages and they don’t monetize those packages, right. So, effectively, the Spring Network is a set of infrastructures, or pipes among institutions that give them security and consumer privacy assurances and that enables the flow of monetary incentives.

So, finally, rather than giving away your information on credit identity for free to like Equifax where you’re finally sharing it with your competitors, you’re actually receiving value and, frankly, the anonymization technologies that we introduced are what enabled this as well because, otherwise, you wouldn’t be willing to share with your competitors.

And so, one of your comments also resonated a little bit which is, over the past several years that ……you know, at first when we were noodling on whether we could actually have this technology get adopted because as you know, there are something….you can develop technology, but if it’s never adopted, it’s sort of worthless, right, and we’re dealing with a highly regulated, compliance-minded industry.

You know, we spend a lot of time speaking with chief risk officers, chief credit officers, CEOs, CTOs, financial institution and financial technology companies and every single one of them said that this type of architecture, right, this decentralized infrastructure that employs the concept of multi-party adaptation and yet minimal disclosure, meaning no PII crosses the network, was the type of architecture that makes tremendous sense in the world. Now, the challenge that we have, having a chicken and egg problem, is can we drive sufficient adoption for this to actually become something ubiquitous.

Peter: Sure. So then, maybe just talk on that…..obviously, you have Avant on board because Spring Labs was born out of Avant, but how have you gone with the other consumer lenders?

Adam: Sure. So, last February, we announced partnerships with 15 leading financial technology companies and lenders. I think we named some of those recruited companies like SoFi, Kabbage, OnDeck, of course, Avant, GM Financial, Funding Circle and some others. Since then, we’ve added dozens of other partners, some of those partners include trillion dollar plus asset institutions and very much household names. We will be making an announcement in the coming months about, you know where we are with those partnerships and the rate of growth which we’re very, very pleased with, but, yeah, I think adoption is coming along quite well.

Peter: Okay, it makes sense to me. I mean, this is a 21st century solution to what has been really …..like we’re a little bit 20th century and the credit bureau infrastructure is pretty much unchanged, it feels like at least. I shouldn’t say that completely, but they’ve made enhancements. The core way they do things, still seems to be the same.

Let’s just maybe talk about that for a second because on your Home Page there, right in the middle of the Home page, you say Spring Labs, The Un-Bureau. So, do you view yourself as a replacement for the credit bureaus, or how do you kind of ….what’s your relationship with them?

Adam: Sure. So, you know, I think we try to be realistic about this. The credit bureaus have been around for many, many decades and they have a treasure trove, specifically, of retail credit performance data. We are an early stage company that is two years old, so the notion that we can come in and disrupt an industry that’s been around for a long period of time and that is supported by a highly regulated industry is not necessarily realistic in the first instance, okay.

That said, the reason we refer to ourselves as The Un-Bureau is that we aren’t a centralized repository of data and not therefore an attack factor. We are an information exchange that is fundamentally aligned with the interest of financial institutions because when there are sensitive data that never leave their firewall, it means they finally retained ownership and control of their data. When they share information, they’re not sharing the underlying data, they’re sharing an activation which is something a little bit sort of different and they actually get paid for it.

So, we’re flipping the system on it’s head, so we’re under in the sense that we’re not a corporate data. We believe in facilitating the safe sharing of data in a much broader universe that exists today.

In terms of adaption, in your question about we view ourselves as a replacement to the bureaus and what our relationship is with them, the truth is we are introducing products on our information exchange that’s using, we believe, meaningfully better than what the bureaus could do today and, essentially, to enhance identity verification, or income verification, or fraud prevention, right. We’re a little bit less related to credit position.

Over time, if we are able to drive sufficient adaption it’s very conceivable that we will get into, of course, credit as well because it’s a natural extension once you have the same parties around the table. In terms of where our relationship is, we see a lot of different avenues to collaborate with the bureaus themselves and, of course, there’s some statements to know where it becomes highly disruptive as well, but I think our general approach, like with most market participants, is to be collaborative and not antagonistic and we are actively working with some of the bureaus today on a number of quite innovative things.

Peter: Okay, that’s good to hear. So, we’re over halfway through this interview and we haven’t mentioned the word blockchain yet, and I think that’s interesting to me. I mean, you developed your Spring protocol, it’s a blockchain-based technology, can you just sort of just talk about….the blockchain is integral to what you’re doing, I presume, so maybe just talk about why you decided to use blockchain as opposed to some other kind of way to implement this.

Adam: Sure. So, I’m very aware that we’re a sort of blockchain, sort of nuclear winter from a perception perspective. (Peter laughs)

Peter: Right.

Adam: But, blockchain is not something that we shy away from, so I will explain that there are three sort of core components to our tech deck. There’s blockchain, there’s the series of advance cryptography, and then our client software and I’ll explain each in turn. So, blockchain, actually, in distributed ledger technology can be quite powerful in a lot of different ways at scale. At the scale that we’re considering a permission network, blockchain plays several relevant roles.

The first is permissioning, so adding sort of new notes, adding new participants. Permissioning is a place where a blockchain could be very useful. The second is creating an immutable record of the receipt and exchange of information, so think about an index. Over time, of all of the information that’s been out there on an individual, or out of business because, again, we’re doing things still beyond just consumer. And then, thirdly, it can actually serve as a ledger around value exchange as well.

So, those are the three ways of which blockchain will be utilized. At scale, there are a lot of other things that blockchain can do, but those are the ways that we use it. The second piece of the technology stack is advance cryptography. So, one of the reasons that J.P. Morgan doesn’t share information with Bank of America in market today….one is there are some regulatory prohibitions on sharing PII between institutions for certain purposes, fine, but the other also is this notion of competitive sensitivity that if Peter were applying to J.P. Morgan, J.P. Morgan wants to know if HSBC had a good experience with Peter….J.P. Morgan can’t just directly ask HSBC at the time you’re applying because HSBC will realize you’re applying for any product and try to poach you.

So, our technology uses advance cryptography in secret sharing technologies to address competitive sensitivity. That’s a really important part of our special sauce, frankly. And then the third is client software which is if you went to a bunch of banks and say, hey, we’ve got this nifty information exchange, it’s obfuscates competitive sensitivity, it’s secure, it’s private, but it involves blockchain in really crazy cryptography, financial institutions will do with it.

So, we needed to have client software that we do with data standardization, they would actually do the cryptographic transforms, so, again, no sensitive information will leave the firewall of a participant, or a financial institution. Similarly on the way in, they can take the cryptographic information, transform it and put it into something useful for either their decisioning or fraud models, or however the financial institution might want to use that information.

Peter: Okay, that makes sense. So then, you’ve mentioned……obviously, you’re in consumer lending, you’ve talked about small business, some of the names you mentioned earlier, I read somewhere about a real estate deal that you guys were in, so what verticals are you focused on?

Adam: Sure. So, ultimately, our technology is generalizable and global, so it can be used in a number of industries beyond financial services. So, it can be used for anonymizing the exchange of HIPAA-compliant medical records, or genomic sequencing it can be used for verifications, or authentications between humans and IOTs, you can just think about the types of use case, they can use for generalized private communication. We are not spending any of our time on any of those other verticals, even though we’ve had inbound interest because we will be boiling the ocean.

So, our entire focus is in financial services, number one, and initially, on things that relate to consumers and small business because that’s where we think we understand some of the problem sets and how to deliver real world solutions to lenders and others. And if we can prove and create proof that it creates value and it works, again, we think that there are many different ways to sort of expand the value of this network.

You know, during the course of 2020, we’re going to be launching a number of different products and those products, for instance within consumer, relate to enhance identity verification, income verification and certain fraud prevention tools like fraud registries as well as loan stacking tools.

In small business where there’s even less information sharing that takes place because there’s no real great bureau out there, ultimately, we will be, again, delivering some of these similar types of fraud and identity, business identity related sort of tool this year. The third is the property lead registry that you reference which was an RFP that we won for PACE Lenders where we think that technology can ultimately be used to create registries that over shift. So, if you think about, you know, natural uses for blockchain like obviating the need for title insurance, you know, this type of technology is one that not only could lead to that, but frankly, can also accelerate the adoption of that because it’s not that the technology can’t be used, it’s how do you change behaviors to drive adoption.

Peter: Right, okay, So then, where are you at today, do you….I mean, I presume you have pilots running, as you said, there’s a chicken and egg problem that sounds like you’ve got a few chickens running around now with all of the partners that you got signed up, so are you in production with multiple partners today? Is it still a pilot that people are running, is anyone doing their identity verification through Spring Labs and that’s it, I mean, where are you at?

Adam: Sure, it’s a great question. So, just as a piece of clarification, nothing that we’re doing is in a pilot phase and nothing that we’re doing will be a pilot. Everything is going immediately into production.

Peter: Okay.

Adam: So, we have commenced the technical integration process with some of our partners and, again, imagine for a second we’re putting technology behind firewalls of highly regulated compliance-minded institutions and, therefore, we need to be stuck to compliance, which we are. We needed to have the best in class sort of penetration testing, we needed to have some of the best and brightest minds around security architecture which, you know, I can describe the work of some our people which is pretty extraordinary.

But then we also have this, you know, understand and deal with thousands of questions, info security sort of questionnaires, we need to get on the road map for technology development as well as to, you know, be on the road map from a risk perspective with all of our partners. So, the process of getting integrated, you know, takes some period of time, we’ve commenced that process

We think by the end of the 2nd quarter, we’ll have eight to nine institutions, all household names, starting to trade data and over the course of 2020, we’re targeting something like 30 institutions to be integrated into the network. You know, the number of partnerships, of course, just continue to grow well, well beyond that.

Peter: So, what about in the alternative lending space, I mean, if I go and take out a loan at Avant today, is the Spring Labs technology in the process yet?

Adam: Not yet. So, we expect trading of data to commence towards the end of the 2nd quarter of this year and to continuous wrapping up as we add, you know, additional skills layers because the focus that we’ve been adding more recently are quite sizeable sort of institutions. So, again, we’ll make an announcement, you know, later that I think will become more obvious where the overlaps will exist. But, we view the next…call it 12 to 18 months as the rubber hitting the road on new stage revenue generation and really sort of proving that this new model for information exchanging and, importantly, will add more value for our customers.

Peter: Right, okay, fair enough. So then, maybe give us a sense of the scale you’re at like how many employees do you have, where are your offices, that sort of thing.

Adam: Sure. So, at this point, we’re roughly 55 employees, almost everyone is based in Los Angeles, in Marina del Rey. We’ve raised capital to the tune of just shy of $40 Million for our Series A from last year. And, you know, I think the majority of the team, about two thirds are engineers, or cryptographers and at this point, everyone’s heads down because, you know, we’ve developed this long standing relationship with these partners and that have been actually involved in developing the products.

So, it’s not just sort of partnership in name, they’ve been actively involved in the development process with us with the past year, or so. So now, we’re just literally trying to deploy the technology and flip the switch and continue to iterate our products because there are a whole sort of use cases beyond the range of the market this year that we think are going to add increasing value to lenders, frankly, and others over time.

Peter: So then, what’s the business model exactly? How are you guys going to make money, is it going to be like….is this a SaaS product, is this like a transaction-based revenue generation, how’s it going to work?

Adam: So, great question. When we started the business, you know, we spent a lot of time thinking about business models and, again, because of the experience that I’ve had in the past at looking and investing in many different companies, we wanted to build a very durable, compelling business model. And so, to share…. our revenue model…again, we’re just an information exchange, so let’s say, Avant is sharing information with Prosper, Marlette, Marcus, and Kabbage, in that scenario with information exchange, the sharing party receives value and we receive some portion of that value.

So, we are a toll collector on the network which means we are not charging set up fees, or monthly sort of subscriptions, or anything along those lines, our interest is, fundamentally, aligned with the volume of information that flows through our pipes. And so, we think that aligns our interest with financial institutions who want more information, and we also think it’s a good business model because it’s one that at scale requires very limited capital.

We’re not in the lending business where we have to put equity in each of the loans, and so at scale, it’s a business that also have high margin, it is a business that ought to have very strong operating leverage, it is a business that should not be cyclical, frankly, in any meaningful way, and it should be a business that doesn’t require significant amounts of capital to be raised over time. Again, maybe to reach out at some point down the road, but, again, we shouldn’t be a serial sort of capital raiser for this business. So, we think it’s a good business model, but, of course, there’s a lot of work to do to get it to scale and prove out that this vision of ours is going to work.

Peter: Yeah, that makes sense. Okay, we’re almost out of time, just a couple of more things I want to get to. You have some very high profile advisors with your company. One, Gary Cohn, who was with the Trump administration earlier and obviously a very well respected executive in financial services so maybe…how were you able to get Gary Cohn on board?

Adam: We do have an incredible Advisory Board and in most cases, these are people who have either backed businesses in the past like Nigel Morris, who co-founded Capital One, or with whom I’ve done work before. So Sheila Bair and I sat on a board together for years, Bobby Mehta, who was the CEO of TransUnion for many years, still on the board of TransUnion, he and I sat on the board for a long time. These are people who have looked at what it is we’re trying to do and believe this is the way of the future for exchanging information.

In the case of Gary, when he left the Administration, a couple of us had this thought that, you know, this is a business that we’re developing that requires not only understanding the technology and how it can be deployed in a commercial context, but also how it’s sort of can exist in a broader and evolving regulatory environment. Gary was someone, having been President of Goldman Sachs and then the Chair of the National Economic Council, a person who really couldn’t understand better the relationship between commercial activity and evolving regulation.

And so, as it turns out, we had a mutual friend, one of his former partners from Goldman had backed another business that I started, he introduced us and we had breakfast in New York and when I explained to him what we were developing, he immediately understood two very interesting use cases for the Spring protocol.

One was in effectively crowd sourcing, ultimate forms of credit performance data and other forms of data that don’t find their way into the system like the asset side of your balance sheet from asset, or investment managers, or your income, or employment, and so, if we were able to flow the incentives of our system as well as security and privacy assurances creating a more vibrant ecosystem of data sharing then all of a sudden, you can start tackling major societal level problems like thin file customers, or no file customers who are caught into the vicious cycle of not having credit, therefore people are not having traditional retail credit, therefore not having a retail performance history, therefore can’t get credit, right.

And so, he understood the power and scale of what we were doing to drive financial inclusion, and the other was he understood how technologies could actually be used to identify, you know, real problems through the cycle for regulators. So, I think, it immediately resonated with him and he has been a terrific advisor, as all of our advisors, because they’re uniquely involved, frankly, in ways that in other companies I’ve been involved with, you know, they’re much more passive even at the board level. We’ve been quite blessed to have some great people involved.

Peter: That’s awesome, that’s really, really great. So, last question then, let’s just assume you guys are wildly successful and all of your plans come to fruition and we have this real-time system, where does that leave the credit bureaus and where does that leave the individual and how they……you know, like they’re still not really owning their data. Maybe the question is, what is the future of credit data in your vision?

Adam: Sure. So, I think that’s a great question and I would answer it from two different perspectives. The first is, we would like to see the world moving away from a silo of hoarding mentality to one where you can have safe sharing, with high security and consumer privacy, and, frankly, that applies within financial services and credit, but, frankly, in the broadest sense, and that is a big thing that sort of motivates us everyday.

The second is, and this is something that we intend to add over time, but we chose not to do it because we think we get to scale faster starting with enterprises, we absolutely want to have consumers in the loop. And we want consumers to be in the loop for several reasons.

The first is we wanted to have transparency and much better transparency than they have today with the existing system. The second is we want them to have better user experience, especially around contestability. Again, have you ever tried to contest the bureaus these days is a complete nightmare.

The third is, in many cases, we actually want consumers to have some amount of control and actual ownership over their data. The reason why I say some, rather than all, is I think there’s often this notion that consumers should own everything, the truth is they should own their identity. And so, they should be compensated, in fact, when some of their information ultimately is used. Again, we think our network can actually accomplish that over time. Perhaps that shouldn’t be the case for credit performance data because you shouldn’t be able to delete, you know, the time you actually forgot to pay.

Peter: (laughs) Right.

Adam: It’s note a universal thing, but the general idea is we want to see the world moving away from these data hoarding silos to safe sharing and we want to see a world where consumers are in the loop with privacy and some degree of control in dramatically better user experience and transparency.

Peter: Well, that is a wonderful vision and I hope we are able to get there this decade. (Adam laughs) It would be great for so many of us. Anyway, we’ll have to leave it there, Adam, I really appreciate your coming on the show today.

Adam: My pleasure, Peter, we really appreciate your inviting us.

Peter: Okay, see you.

Adam: Alright, thanks.

Peter: You know, I think even the credit bureaus would acknowledge that the future of credit and personal identifying information….it’s not stored in a centralized database. I think the way we have it set up today is, if not broken, it’s certainly in need for improvement. What Spring Labs has got is, I think, a pretty compelling case for one of the visions that could actually come to fruition when it comes to how all this information is stored and how access to it works. I think we have a long way to go before they get there.

Adam acknowledges that as well, they are not ready for prime time yet, but I think they’re getting there, whether it’s Spring Labs, or somebody else, I really feel like we are going to have a decentralized system. I think it’s going to happen this decade.

Anyway on that note, I will sign off. I very much appreciate you listening and I’ll catch you next time. Bye.

Today’s episode was sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. It’s happening on May 13th and 14th, 2020, at the Javits Center in New York City. Lending and banking are converging and LendIt Fintech immerses you in the most important trends of the day. Meet the people who matter, learn from the experts and get business done. LendIt Fintech, lending and banking connected. Go to lendit.com/usa to register.[/expand]

You can subscribe to the Lend Academy Podcast via iTunes or Stitcher. To listen to this podcast episode there is an audio player directly below or you can download the MP3 file here.

Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech.

LendIt Fintech conducts three conferences a year for the leading fintech markets of the USA, Europe, and Latin America. LendIt also provides cutting-edge content all year long via audio, video, and written channels.

Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.

Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.

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