Home Small business financing NAOS Finance partners with IoTeX [Global Credit Solution In Action]

NAOS Finance partners with IoTeX [Global Credit Solution In Action]

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NAOS Finance partners with IoTeX [Global Credit Solution In Action]


How many more businesses would survive and prosper if lenders had better information for lending decisions? When Ben comes in for a loan, he has to prove he’s a reasonable credit risk. But he may not be able to provide all of the information requested by a lender. What can he do to prove he is a trustworthy borrower? A lender doesn’t make money if they say no to a qualified borrower. There is a new blockchain-based solution.

Micro, Small and Medium Enterprises (MSMEs) generally have difficulty obtaining loans from financial institutions because the conventional credit scoring process relies on the analysis of financial statements to assess creditworthiness.

“MSMEs represent 90% of global businesses and contribute over 40% of GDP in emerging economies. NAOS is on a mission to expand DeFi beyond the existing 1% of global users, and there’s no better place to start than to tackle the issue of financial inclusion for global MSMEs. We are excited to partner with IoTeX to provide real-world solutions to reduce funding gaps. »Kevin Tseng, founder of NAOS Finances.

The International Finance Corporation (IFC) estimates that 40% of these small businesses in emerging countries have an unmet financing need of $ 5.2 trillion each year, which is 1.4 times the current level of loans to businesses. global MSME companies. A significant percentage of these businesses would get loans if they had the option of providing more complete documentation or if the loan criteria were better suited to their business.

NAOS Finance and IoTeX want to help these small businesses. Blockchain technology is integrated into the credit risk process, allowing companies to have more data taken into account in their loan applications. This helps small businesses meet their financing needs in a secure and verifiable manner. Blockchain technology, provided by IoTeX, can verifiably track real-world assets to be considered as part of the loan application.

Blockchain solves the problem of trillions of dollars wasted or unallocated under the currently stringent loan application process. This will prevent businesses from going bankrupt and allow lenders to make more loans and earn money.

This is the first time that this missed opportunity has been properly addressed. This has the potential to impact the lives of business owners around the world.

Although credit bureaus such as TransUnion, FICO, and Experian provide additional assessment support, they still focus only on banking, loan, and financial data. To date, few non-bank entities participate in a unified way in this space of problems. NAOS and IoTeX are leading the way in solving this monumental problem.

In emerging markets where banking and credit card adoption is in double digits, alternative data such as e-commerce transaction records, location-based call data, micro-loan repayment histories mobile, cellular data and social media are used. as factors in Alternative Credit Scoring (ACS) to determine the consumer’s financial and consumer fitness. All of these data points can help more businesses and increase the volume of loans distributed. In turn, businesses and credit institutions benefit.

The perfect union of NAOS and IoTeX will bring non-financial data on the chain to provide this Alternative Data Scoring (ACS) for Small Business (MSME). For more context, ACS combines financial data with alternative data such as electricity / fuel consumption, frequency / quality of delivery, and warehouse activities to predict possible defaults. When an MSME requests a loan, NAOS automatically retrieves the requested alternative data from the IoTeX blockchain for use in credit scoring. The data is then fed into NAOS ‘credit decision engine for further modeling and decision making.

“We are excited to partner with NAOS Finance to connect the real world to the blockchain universe. Together we introduce a new utility for real world data from “Powered by IoTeX” devices to power reliable lending / borrowing of real world assets. This enables transparent valuation of real world assets based on verifiable real world data. – Raullen Chai, co-founder of IoTeX.

IoTeX devices such as Pebble tracker are designed to capture verifiable real-world data and make it available to blockchain Dapps. Pebble Tracker is currently being tested in several supply chain test beds, which will be a perfect sandbox for bringing NAOS-IoTeX trust scores to corporate clients. In addition, since 2020, IoTeX has been developing its TruStream protocol, a real-world data oracle designed to work with all types of IoT devices. TruStream will bring a greater variety of trusted data from trusted devices to the blockchain.

Non-financial data combined with financial data provide a solid basis for new age credit underwriting models. Each of the non-traditional data points will be treated as a valid factor for credit scoring and will be given specific weight depending on the nature of the business. The resulting credit scores now contain essential behavioral attributes that help NAOS and the community to make better decisions about the allocation of interest rates, the debt ceiling and the terms of repayment.

Under this new system, if I’m a potential borrower, I know that when a lender sees my past behavior, they’re telling them how creditworthy I am. Now they can determine if I qualify for a loan and on what terms. NAOS and IoTeX make this process secure, streamlined, and beneficial for small and medium businesses beyond traditional banking conventions. This innovative partnership has the potential to change the process of credit risk as we know it today to provide capital to small businesses that would otherwise not qualify. This people-centered perspective is made possible by blockchain technology to give borrowers a greater chance of prosperity.

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