Have you been holding back from implementing a blockchain solution? If so, you might be stuck in “myth mentality.” Though blockchain holds great potential for improvements that can be leveraged across the entire mortgage ecosystem—particularly when it comes to verification and preservation of sensitive documents—the utility of the technology is often misunderstood.
I’ve noticed five myths in particular often surface about blockchain in the mortgage industry, so let’s bust through these common misperceptions to give your team the best chance of benefitting from this cutting-edge technology:
Myth #1: It’s just a fad.
Reality: Like the Internet, blockchain is here to stay. I just smile when I hear people say that blockchain is just a fad and won’t be around long. I heard the same comments from people when they say that the Internet would go away, that no one will ever shop for a home on the internet or that the fax machine is just fine to send documents around. Why would we need the Internet, web pages, email or integrated systems? I am pretty sure the technologist and business people who made these comments did not end up being the successfully kings and queens of the mortgage industry.
Similarly, we can say this of blockchain’s advantage for the mortgage industry: if there’s now a way to have a basic source of immutable data to verify the integrity of mortgage documents, and that you can easily share throughout the mortgage ecosystem, why doubt that it has value? Whether or not blockchain becomes as world-changing as the Internet, this technology will without question change the way we think about storing and preserving our records.
Myth #2: Blockchain may be a potentially “game changing” technology, but it doesn’t have everyday business application
Reality: The most powerful technology does change everyday business. And what happens next is like a ripple effect—by saving companies time and money on basic everyday problems that the mortgage industry faces like auditing, due diligence, and document verification, blockchain will become embedded within our business until we forget that we ever questioned it.
Handling those administrative tasks and solving classic record-keeping problems with a simple solution may not command the same level of media interest as hot topics like security and the big-picture speculations of how blockchain could change the world. But the way that long-term industry improvements will come about is by consistently paying attention to the little things that blockchain influences in everyday situations in the mortgage ecosystem.
Myth #3: It’s too complicated to understand.
Reality: Just because blockchain is a complicated concept doesn’t mean it’s a complicated implementation. The base technology that runs your email is significantly more complicated than blockchain, but that didn’t stop email from permeating every inch of the business world. Companies like Factom and others are developing tools, like an email application, that remove all the complexity from the technology and just let the users benefit.
At the end of the day, you don’t need to understand exactly how blockchain works to reap great benefit from this tool. Blockchain-based tools like Factom Harmony are actually designed to keep things simple for users who need to solve record-keeping challenges. All you really need to know is that you can use API calls with this solution, which allows you to develop a set of routines and protocols that you can rinse and repeat. So it’s actually a speedy implementation that’s designed to do the job quickly and in conjunction with your existing platforms. There’s no need to overcomplicate it.
Myth #4: Blockchain is all about strange new cryptocurrencies
Reality: Cryptocurrencies exist because of blockchain. It is the game changing technology within blockchain that has shaken the foundation of the financial systems
Blockchain is a tool, a tool for developing completely different recordkeeping and data exchange that, just like the Internet, will completely reshape all financial related businesses. The first business that is being shaken to its’ core is the currencies market. Bitcoin and other new currencies that have appeared thanks to blockchain tools are just the tip of the iceberg. Financial institutions have recognized this and have joined together to form the R3 Consortium, made up of over 70 of the world’s largest banks, raising over $100M to develop blockchain tools for banking.
Myth #5: Our existing systems managing audit logs and records verification just fine.
Reality: The fax machine was also “just fine”. For every technology there was a time when it became obvious that it was no longer “just fine”. All technology eventually becomes obsolete. But in today’s world obsolescence happens incredibly fast. Before the mortgage crisis we all though our technology for lending and servicing and the associated controls and processes were “just fine”. We were wrong. So we spent a decade upgrading and improving our systems and processes but we did so with technology tools that didn’t represent any great leap forward. When we understand the power of blockchain and that having a trusted third-party store proof of digital documents or data is the only foolproof way to solve the mortgage industry’s potential compliance problems, then it becomes clear why blockchain will be the technology that makes what we spent the last decade creating, obsolete. It is time once again for a great leap forward.
Factom Harmony enables organizations to better coordinate audits, interact with all loan documents and data across multiple sources, deliver final documents faster and utilize resources more efficiently - all through one platform. Remove the risk of missing documents using Factom Harmony. Find out more at Factom.com or email firstname.lastname@example.org.