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Hackernoon logoThe Solution for Universal Access to Credit by@varunsatyam

The Solution for Universal Access to Credit

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@varunsatyamVarun Satyam

Revolutionary, technological advancement is busy rocketing the world forward at a dizzying speed. And, don’t we just love it!

We can hardly wait for the latest gadgets & solutions to hit the shelves or enter our lives, making it easier, more convenient and simply better.

But, unfortunately, that’s not true for all of us. Almost one third of the people on our planet are excluded from sharing in the joy merely because they do not have access to financial resources like the rest of us. Or, when they do, it’s often discriminatory.

Enters Swapy. Please continue reading to see how the Swapy Network is set on levelling the playing field for all around the world, including the needy and underdeveloped, by means of its solution for universal access to credit.

Current credit systems exclude or punish people

Two billion people around the world do not have access to financial services and credit facilities. This is a particular problem in emerging economies as banking conglomerates typically make their services unavailable to the poorest populations or those living in remote areas.

VIDEO

Global interest rate disparity

Even when credit is available in underdeveloped or developing parts of the world, it’s at very high interest rates. Data compiled by the International Monetary Fund (IMF) shows that countries like Madagascar, Brazil and Angola have recorded interest rate spreads that were as high as 39%-80% p.a. since 1995.

While, at the same time, most developed nations have very low interest rate spreads, for instance the United States at around 3% and Japan below 1%. And, as far as real interest rates go, most developed nations have zero or negative percentages i.e. consumers can borrow money at negligible rates and sometimes even cost-free.

Information asymmetry

Givers of credit -such as banks, financial institutions & loan companies- base their loan decisions largely on consumer data; such as the applicant’s credit history, personal demographics and so on. For credit systems to function effectively, the availability of such information and access thereto is essential for lenders.

However, because data is not fairly accessible by all players in the credit market, it represents a situation of information asymmetry which hinders wider participation and specifically excludes poorer regions.

The quantity and quality of information available varies from country to country and depends on several factors; such as government regulation, the levels of informal labor and the degree of poverty in the area.

However, even in countries where credit bureaus do hold quality consumer data, the cost to access that data is high; and, in turn, this increases the cost of credit.

The high cost of capital

The risk-based cost of capital in developing nations is very high. A case in point is again Brazil, where the average interest cost of unsecured loans for households is 127% per year, credit card rates are around 332% and overdraft interest rates at 321%.

One reason therefore is that the Brazilian banking market is extremely concentrated i.e. the institutions have carte blanch in terms of the lending rates charged to customers. There is not much competition between lenders as only five banks service 93% of the nation’s loans.

The inability to service all needs

A significant reason why two billion individuals lack access to financial services is because traditional banks cannot find cost-effective means of servicing the full populace, especially those at the bottom of the socio-economic pyramid.

Often, potential customers will have to travel prohibitive distances to reach bank branches. Or, simply, because they are of lesser means, banks do not value them as clients.

The consequence is that these individuals are excluded from the global credit ecosystem. For example, in Brazil, 40% of the population is unbanked.

The majority of credit services are still non-digital

Even though tablets and smartphones are increasingly present in the everyday lives of the Brazilian people and evidence suggests that consumers clearly prefer the digital channel, the majority of credit services are still delivered on a face-to-face basis.

For instance, in Brazil, between 2010 and 2015, the number of non-face-to-face credit transactions totaled 236 million compared to 557 million for

face-to-face channels. Thus, 70% of all credit transactions are still made in person and not by means of digital channels.

The Swapy solution

Swapy Network is a decentralized, global credit platform that aims to connect & integrate lenders, borrowers, data bureaus and other stakeholders such as insurers.

Swapy takes a market-based approach to mitigating the costly and exclusionary effects of global disparities in the credit business; thereby, promoting universal and equal access to credit by everyone around the world.

For individuals everywhere, regardless of where they are situated, Swapy allows participation in credit markets by means of one, single financial identity that is valid worldwide. And, with access to lenders from right around the globe, borrowers can benefit from the most competitive loan interest rates available on the planet.

Because the Swapy data network is accessible by all lenders equally, on a 24/7 basis and because the data is always valid & up-to-date, it eliminates information asymmetry and purges the corresponding costs from the credit process. And, in turn, lower system costs mean lower lending rates for consumers.

Furthermore, with Swapy, all applicants’ own the rights to their personal data and have the opportunity to monetize it.

As far as lenders go, the global Swapy Network allows all an equal access to the pool of potential borrowers around the world, which mitigates the unfair advantage currently enjoyed by the monopolistic, mega-lenders.

The up-to-date Swapy credit database further allows credit-givers to make better lending decisions and offer lower rates to good clients; which, in turn, enhances the competitiveness of the lender.

The overall low cost of participation that the Swapy Network offers to lenders, removes the previously high barriers of entry into the credit industry. And, because more lenders are participating, access to credit by individuals from all corners of the world is possible, thereby making Swapy a true and viable solution for universal access to credit.

The Swapy platform

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Swapy’s decentralized, global network platform comprises of three integrated applications working in perfect harmony to provide universal access to credit.

The Swapy Exchange

Connects smart money to emerging economies. It introduces international investors, hailing from countries where the interest rates are comparatively low, to credit companies in countries where the interest rates are comparatively high.

Swapy connects markets everywhere

Investors are therefore given an opportunity to pursue higher yielding possibilities and on a global scale. While, the credit companies resident in countries all around the world have access to lower-cost capital, which, in turn, can be passed on to consumers by means of world-class, lower interest rates.

Swapy Financial ID

Empowers borrowers on global scale. It reflects their credit score rating which is always up-to-date and relevant, therefore easily verifiable by lenders. The Financial ID rewards good borrowers and gives them access to instant, low-cost credit facilities. While, at the same time, it will encourage others to achieve similar status, thereby growing the worldwide pool of viable borrowers on a continuous basis.

Swapy Data Market

Because users of the Swapy Network own and control their own data, they are able to exercise control by means of the SWAPY token.

The token empowers users to hold their own data, choose how many tokens they receive in exchange for it and with whom they want to share.

Furthermore, the Swapy Data Market makes the sharing of credit information possible between all willing partners and not just the large corporations anymore, which is greatly beneficial to the overall competiveness of the universal credit market as a whole.

You can Try the Alpha version! of Swapy Exchange. It is a simulated version and for demonstration purposes only. It uses dummy Ethers –not real currency- and runs on Ethereum Ropsten Testnet for its demo transactions.

The Swapy platform also promotes the establishment of a Circular Economy on the network, where new entrants can offer products and services on the Swapy Network and get paid in SWAPY. More information on the Circular Economy is available on page 13 of the Swapy whitepaper.

SWAPY Token & ICO

The SWAPY token can be described as the official currency of the Swapy platform network. All value exchanges on the network between the users themselves, also between the users and the platform, will be made by means of SWAPY.

What can SWAPY be used for?

SWAPY is a utility token and it will be used to pay for the individual’s information on the platform, also for other Swapy Network services –such as credit scoring- and, once app development has been completed, borrowers may further use their SWAPY as loan collateral when securing credit through lenders on the platform.

How can I buy SWAPY?

There are two main phases, the pre-sale and the crowd-sale. Do I have any advantage of buying on the pre-sale? The token is available at attractive discounts during the pre-sale, which starts on March 19, 2018. Further information is available on the Swapy website.

How many tokens are available and how will the Swapy Network use the funds raised?

Full TGE Details is available on the Swapy website, also under “Token Offer”, “Economics” and “Use of Tokens Sales Proceeds” on pages 20–23 of the Swapy whitepaper.

Swapy also offers a bounty program where anyone can Join Bountyhive & Earn SWAPY Tokens !

Management, Roadmap & Milestones

Swapy Network is an open-source project managed by the Swapy Company, which is fully owned by Credit Dream Inc.; a Delaware Corporation established in November 2014.

The company is managed by a highly skilled & experienced team, suitably assisted by a panel of capable advisors.

More information on the Swapy Team, Partners & Advisors is available on the website. Also, on pages 21–24 of the Swapy whitepaper.

The Swapy journey started in early 2017 and can be viewed on the Swapy Roadmap as reflected on the website. Further information on the “History” and the “Estimated Software Development Plan” of Swapy can be found on pages 25 & 19 respectively of the whitepaper.

Conclusion

The Swapy Network platform is setting out to fulfil a much-needed solution for leveling the playing field right around the globe as far as equal and universal access to credit is concerned.

By leveraging the cutting-edge benefits of a decentralized, blockchain network and cryptographic token, Swapy connects lenders and borrowers anywhere, everywhere and anytime.

The testimonials by Tim Draper and Don Tapscott below is suitable testament to the revolutionary vision of the Swapy Network and the commendable outcomes which it has set out to achieve.

Tim Draper

“ Very exciting to see Swapy Network going after cheaper credit and student loans. Clever solution. “

Don Tapscott

“ Blockchain will fundamentally change the way we access credit. Proud to be supporting Swapy Network as they make that vision a reality. “

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