3 OEMs Using Blockchain to Disrupt Auto Finance

  • Emma Sandler
  • May 1, 2017
  • 1

Everything is ripe for disruption.

Auto finance, in particular, is poised to be disrupted with the use of blockchain in the near and not-so-distant future. Blockchain is a public ledger of digital transactions that can be shared among a distributed network of computers; it allows participants on the network to securely manipulate the ledger without the need for a central authority.

Within auto finance, blockchain could allow driving patterns and service events to get sent to a shared ledger that all parties have access to.  The vehicle’s wear and tear can help the auto finance provider accurately gauge the remaining value of the vehicle as the lease approaches its end-of-contract date, for example.

Here are 3 automakers that are already experimenting with blockchain for auto finance:

1. Daimler AG

Daimler joined the Hyperledger Project — the cross-industry effort for the advancement of blockchain technology — in February 2017. Hyperledger Project, part of the Linux Foundation, has more than 115 members across multiple industries including finance, healthcare, the Internet of Things, credit card services, and aeronautics, according to its website.

“Being a part of Hyperledger allows us to collaborate with a global network of experts in order to build the cross-industry blockchain standard, for customers, supply chain, digital services, financial services, and financing tools,” Kurt Schäfer, head of treasury at Daimler AG, said in a statement. “We look forward to joining this community.”

2. Toyota Financial Services

Toyota’s financing arm joined the R3 blockchain consortium in June 2016 to explore potential applications of distributed ledger technology in auto financing.

The strategy of the partnership between Toyota and R3 is driven by the common goal to research and test distributed ledgers with a focus on non-financial use-cases. The finance arm of the car maker sees a high potential for blockchain in that particular sector, according to Chris Ballinger, former chief executive and global chief officer for strategic innovation at Toyota Financial Services.

“Beyond finance, we believe additional applications of the technology in auto manufacturing and sales will benefit our customers by making mobility more affordable and available,” he said in a statement.

3. Mahindra & Mahindra

Earlier this year, Indian automaker Mahindra announced it will set up a blockchain incubator to support startups in the development of blockchain-based applications in a number of industries. Mahindra partnered with technology company IBM in 2016 to develop a cloud-based blockchain solution in trade finance for the Indian market. The blockchain solution is aimed at small- and mid-sized enterprises that are clients with Mahindra Finance, the manufacturer’s finance arm, according to a published report.

To learn more about the evolution of transportation, join us at the second annual Auto Finance Innovation 2017 conference, May 17-18 at the Hilton Bayfront in San Diego. Visit www.autofinanceinnovation.com to register or learn more. To request a media pass, contact Skylar Taylor at staylor@royalmedia.com.

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