Spring Labs CEO, Adam Jiwan. Image source: Twitter
The auto lender will join the Spring Founding Industry Partners Program to work with Spring Labs as it develops its blockchain products, the first of which are expected to launch in the first half of 2019.
“We came together with the view that we could develop a series of use cases that would match some of [GM Financial’s] core business priorities as a lender, or potentially [those of] GM as a parent company,” Spring Labs CEO Adam Jiwan told Forbes.
This isn’t GM’s first foray into blockchain: it joined Hyperledger, a group working to develop open-source blockchain technologies for businesses that also counts IBM, J.P. Morgan, and FedEx among its members, in late 2017.
For GM Financial Chief Strategy Officer Mike Kanarios, the partnership with Spring Labs was a natural fit as GM continues to dip its toes into blockchain. “We believe that they have the most momentum in this space,” Kanarios says.
The startup is developing a protocol that will allow companies to securely exchange and verify sensitive information, like a customer’s credit history. Jiwan says this could help both lending and non-lending institutions share information about customer identities without compromising customer privacy, making it easier for everyone to identify fraudulent actors.
Kanarios thinks that Spring Labs’ protocol could help GM Financial combat synthetic identity fraud, which occurs when a fraudster uses both real and fake identification information to create a new identity and make purchases. Fraud like this costs GM Financial millions of dollars per year in both losses of inventory and prevention costs, and Kanarios says a blockchain-based identity verification program could be a “better, faster, and cheaper system” than the lender’s current processes.
And while synthetic identity fraud is an especially difficult problem for GM Financial and other auto lenders because of how expensive a lost product can be (an SUV that is fraudulently purchased from a dealership might be impossible to recover, for instance), Kanarios says a blockchain use case like this one could work for lenders across a variety of industries.
The implications of the protocol in the auto sector, however, may go beyond just lending. Jiwan imagines future use cases like blockchain-based registries and payments systems for shared vehicle contracts, for example.
David Treat, a managing director and global blockchain lead at Accenture, says the use of blockchain in general in the auto industry could extend to everything from insurance to traffic control and city planning to self-driving cars and AI, making driving safer, more secure, and more efficient. "All three of those outcomes are hugely benefited by the right kinds of shared data,” Treat says.
Like Accenture, GM is a member of the Mobility Open Blockchain Initiative (MOBI), a group dedicated to exploring applications of blockchain like these. BMW, Ford, and Groupe Renault are also members.
Major hurdles remain before blockchain becomes the norm in any sector, however: companies must figure out how to implement the new technology on a very large scale, comply with existing regulations, and maintain customer privacy. Plus, a blockchain-based solution isn’t always right for every company’s needs. But for Kanarios, the potential is too great to ignore.
“Of course there are...challenges with it,” he says, “but it's one of those things that we wanted to get involved in to make sure that we took advantage of the technology.”