Note: Descriptions are shown in the official language in which they were submitted.
SYSTEM AND METHOD FOR DYNAMIC FINANCIAL MANAGEMENT
FIELD
[0001] Some embodiments herein relate generally to the fields of
financial services and
information technology. More specifically, embodiments described herein relate
to systems and
methods monitoring and improving one's credit history and, more particularly,
to systems and
methods for creating a synthetic collateralized loan and an automated
revolving loan manager.
INTRODUCTION
[0002] In Western banking systems, a credit score is a key numeric value that
is used to
systematically and objectively score and consequently classify consumers on
their ability to
.. manage their finances as well as their ability to pay back loans. This is,
in part, used for loan
repayment qualifications and as a protective measure for financial
institutions (Fls) to alleviate
some of the risk when issuing out a loan. The measures taken by Fls influence
whether a
consumer gets approved for a mortgage, auto loan, credit cards, and most
importantly, the rates
at which they receive these products. A poor credit score can cost
individual's thousands of
.. dollars in high interest rate fees and can, in some cases, hinder
employment opportunity and
potential rent inquiries. Approximately 200 million Americans currently have
credit files, and the
major credit bureaus are generating more than 1 billion reports each year.
[0003] There is an abundance of evidence to support the need for credit
building assistance.
For example, the National Consumer Law Centre reports that "70 million
consumers have had
interactions with the debt collection industry in [2016]". The IRS showed
5,098 approved tax-
exempt credit counselling organizations in 2015 compared to 788 in 2005. In
2015 the IRS
reported revenues from these organizations totaling USD $2.3 trillion, as
compared to USD $1
billion in 2005. A ¨6.5x increase in organizations and a ¨2300x increase in
revenue indicate a
significant suggestion that more and more individuals are seeking help with
regards to
managing their credit. With these types of increases, there is clearly a need
that prior art is not
fulfilling in terms of credit improvement and financial management support.
SUMMARY
[0004] Embodiments herein may enable computerized systems to attain faster
transaction
times, while maintaining security, by allowing clients to secure a loan, while
simultaneously (or
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nearly simultaneously) collateralizing that loan with funds received by the
system, and investing
the loan once secured, into a financial product. Further, when coupled with
the transparency of
a detailed audit trail, and verification that a blockchain ledger provides,
some embodiments may
also provide, in addition to faster transaction times, greater and easier
access to transaction
records, and may substantially remove counterparty risk.
[0005] In accordance with one aspect, there is provided a method for
monitoring and
dynamically optimizing credit utilization, the method comprising: a) storing a
financial transaction
data associated with the client in a distributed blockchain ledger; b)
monitoring the financial
transaction data associated with the client via the distributed blockchain
ledger; c) monitoring
one or more issuer subsystems for at least one debt associated with the
client; d) detecting a
loan instrument associated with the client, the loan instrument having at
least one loan
instrument parameter; f) calculating an optimal credit utilization factor for
the client by
aggregating and processing the financial transaction data associated with the
client according to
one or more parameters of an optimal utilization rate; g) executing an
optimization process to
accord one or more values within the financial transaction data associated
with the client with
the one or more parameters of the optimal utilization rate; and h) writing a
record of the
optimization process to the financial transaction data associated with the
client stored in the
blockchain ledger.
[0006] According to another aspect, the distributed blockchain ledger is an
append-only,
immutable database.
[0007] According to another aspect, the financial transaction data
includes: a) at least one
unique identifier associated with one or more financial transactions; b) a
plurality of details
relating to the one or more financial transactions; and c) one or more
timestamps associated
with each unique identifier.
[0008] According to another aspect, the optimal credit utilization factor is
calculated by a debt
prediction engine, the debt prediction engine 211 processing the financial
transaction data
associated with the client to determine the optimal credit utilization factor
prior to the detection
of the loan instrument associated with the client.
[0009] According to another aspect, the one or more values within the
financial transaction
data associated with the client include at least one debt limit of at least
one debt instrument.
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[0010] According to another aspect, the optimization process includes
according the at least
one debt limit of the at least one debt instrument with the one or more
parameters of the optimal
utilization rate.
[0011] According to another aspect, the optimization process includes repaying
the at least
one debt instrument and securing a second at least one debt instrument having
a second at
least one debt limit.
[0012] According to another aspect, the optimization process includes
reconfiguring the at
least one debt limit of the at least one debt instrument.
[0013] According to another aspect, the method comprises sending at least one
notification to
at least one credit bureau.
[0014] According to another aspect, at least one smart contract automatically
executes at
least one step of the method.
[0015] According to another aspect, the optimization process includes securing
at least one
investment vehicle having at least one investment vehicle parameter.
[0016] According to another aspect, the method comprises liquidating the at
least one
investment vehicle and securing a second at least one investment vehicle
having a second at
least one investment vehicle parameter.
[0017] In various further aspects, the disclosure provides corresponding
systems and
devices, and logic structures such as machine-executable coded instruction
sets for
implementing such systems, devices, and methods.
[0018] In this respect, before explaining at least one embodiment in
detail, it is to be
understood that the embodiments are not limited in application to the details
of construction and
to the arrangements of the components set forth in the description or
illustrated in the drawings.
Also, it is to be understood that the phraseology and terminology employed
herein are for the
purpose of description and should not be regarded as limiting.
[0019] Many further features and combinations thereof concerning embodiments
described
herein will appear to those skilled in the art following a reading of the
instant disclosure.
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DESCRIPTION OF THE FIGURES
[0020] In the figures, embodiments are illustrated by way of example. It
is to be expressly
understood that the description and figures are only for the purpose of
illustration and as an aid
to understanding.
[0021] Embodiments will now be described, by way of example only, with
reference to the
attached figures, wherein in the figures:
[0022] FIG. 1 is a block diagram depicting components of an automated credit
improvement
system, according to some embodiments;
[0023] FIG. 2 is a flow diagram depicting the flow of data through components
of an example
automated credit improvement system, according to some embodiments;
[0024] FIG. 3 is a flow diagram depicting an example onboarding procedure and
loan
underwriting procedure according to some embodiments;
[0025] FIG. 4 is a flow diagram depicting an example process for serving
of the principal plus
interest of a loan, according to some embodiments;
[0026] FIG. 5 is a flow diagram depicting an example process for settling a
loan using a
crypto wallet, according to some embodiments;
[0027] FIG. 6 is a flow diagram depicting an example process for reinvesting
funds, according
to some embodiments;
[0028] FIG. 7 is a flow diagram depicting an example process for
processing a client's
decision to continue or terminate service via the credit improvement system
(CIS), according to
some embodiments;
[0029] FIG. 8 is a flow diagram depicting an example process for terminating
an account in
the CIS, according to some embodiments.
[0030] FIG. 9 is a flow diagram depicting an example process for a client
securing a revolving
loan by means of the CIS when the bill or payment is consistent, according to
some
embodiments;
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[0031] FIG. 10 is flow diagram depicting an example process for a client
securing a revolving
loan by means of the CIS when the bill or payment amount is above a pre-set
threshold; and
[0032] FIG. 11 is flow diagram depicting an example process for a client
securing a revolving
loan by means of the CIS when the bill or payment amount is below a pre-set
threshold.
DETAILED DESCRIPTION
[0033] One problem in current financial systems is the inefficiency caused by
fragmented
participants and legacy infrastructure. This makes transactions
(lending/investments) slow and
insecure. Settlements take several days to execute and are delayed by hard-
copies of
agreements and due diligence documents. By utilizing a distributed ledger and
storing the
transaction on a blockchain, all transactions can be processed swiftly,
securely, and efficiently
since multiple actors may not be required to accomplish clearing/settlement.
[0034] Embodiments herein may enable computerized systems to obtain faster
transaction
times by allowing clients to secure a loan, while simultaneously (or nearly
simultaneously)
collateralizing that loan with funds received by the system, and investing the
loan, once
secured, into a financial product. Some embodiments may also allow clients to
secure other
financial instruments or may automatically secure, manage, and/or terminate
revolving financial
instruments such as revolving loans. Further, when coupled with the
transparency of an audit
trail, and verification that a blockchain ledger provides, some embodiments
may also provide, in
addition to faster transaction times, greater and easier access to transaction
records, and may
substantially remove counterparty risk.
[0035] With so much emphasis placed on credit scores and history, consumers
are
surprisingly oblivious to the factors that influence this score and lack the
understanding of how
certain actions can affect it in a negative or positive way. In addition, the
most alarming
discovery is the consumer's unwillingness or lack of time to invest the effort
needed in getting a
comprehensive understanding of the score, and also diligently and consistently
following the
required practices involved with improving the score. The system and method
described in this
patent automates this time consuming process for the consumer and builds a
healthy
relationship with financial management through saving while building a better
credit history.
[0036] There are several companies attempting to market themselves as helping
consumers
build their credit. Firstly, there are the websites such as Borrowell and
Credit Karma. These
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websites rely on quarterly reports provided by the credit bureau's (CBs) to
update the
consumer's credit file information. The CBs acquire the consumer's credit
files from financial
institutions whose main goal is to make a profit from the interest margins.
After presenting the
consumer with the free credit score, these websites then market their own
loans and services to
the consumer at a rate reflecting the credit score they received from the CBs.
[0037] Secondly, there are credit counseling agencies which provide
assistant in financial
knowledge, basing their models on education. These agencies generally follow
the form of pre-
generated bullet point messages on how a consumer can improve their credit
score. Such
general recommendations can include "Pay your bills as they come due", "Length
is important to
.. credit history", and "Keep your credit card balances low". At the most
helpful, they might offer
suggestions to the consumer's current situation by parsing your credit file.
In either case, having
knowledge on how to improve a credit score is irrelevant unless the consumer
adopts and
integrates the recommendations into their daily spending habits.
[0038] Thirdly, there are the debt consolidation firms. These firms make
claims to improve a
consumer's current credit score standing by consolidating all the debt
payments into a blanket
loan with one payment, while supposedly "reducing" the loan amounts owed
through
negotiations with the creditor. Although easier, this debt consolidation comes
with a high interest
loan and is not the optimal solution to a so called "credit fix".
[0039] Finally, there are self-implemented recommendations that consumers
can utilize to
make consistent payments easier. For example, clients who have credit cards
can usually set-
up automatic bill payments or register to receive reminders. These fail in two
ways: i) the credit
cards can be maxed out using this method, downgrading the client's risks
score; and ii) this can
cause over-the-limit transactions and the consumer will end up paying hefty
fees. Although
reminders are sent out, this doesn't guarantee the bills will be paid on time.
In addition, most
financial institutions do not report on small loans. The consumer data files
are simply too costly
to send to CBs that the financial institutions (Fls) only report on large
loans such as a house
mortgage and auto loans. This is a catch-22 situation because attaining these
mortgage and
auto loans depend heavily on having a good credit score to begin with.
[0040] There is, therefore, a need in the art for a method and system to
automate the loan
application, security investment, and monthly payment withdrawals to assist
individuals in
saving money as well as a regulated reporting process of positive loan
payments to the CBs.
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[0041] Cryptographic wallets and smart contracts can make such systems
run automatically,
solutioning end-to-end management and monitoring of the lending process,
agreement
generation, loan disbursement, loan repayments, alarms, recovery in case of
default, and
investment execution and management. Additionally, the advantages to this
system are in the
security of documents. Use of cryptographic wallets and cryptocurrencies may
provide
advantages as it may provide settlement times that are much faster than the
current
infrastructure allows, and encryption may increase the security of such
transactions.
Incorporation of smart contracts may be advantageous because it may remove
inefficiencies in
the contract lifecycle, thereby reducing the degree of human intervention
required in negotiation,
execution, administration, and compliance; in return smart contracts may
improve the speed,
reduce the cost, and increase the security of contracts.
[0042] By utilizing military-grade encryption techniques like hashing,
public-private key
encryption, Merkle trees, and consensus protocols, the assets collected by the
system are
securely protected and by using smart contracts the system becomes self-
managed and self-
verified, protecting the clients and providing ease of use to the auditors,
something that prior art
cannot fulfill. Moreover, with the decentralized nature of the
cryptocurrencies used for lending
and investment, the system may be able to remain free from political and
governmental risks.
Since there is no central authority, the inflationary risks or monetary
controls will be non-
existent.
[0043] Embodiments described herein provide methods and systems for loan
processing,
creating a synthetic loan in order to report loan payments while actually
saving money monthly
and accessing the saved funds at the end of the term. The system, using a
financial partner
(issuer), will receive a loan request from a client subsystem, automatically
executing a smart
contract with the issuer where the loaned funds will be received and then
placed right away into
an investment vehicle, and then the system will report account creation and
payments to the
CBs.
[0044] FIG. 1 displays, according to some embodiments, the credit improvement
system
(CIS) 101 where data from the distributed blockchain ledger can be moved to or
from system to
various subsystems. The CIS 101 may be capable of transferring data via one or
more
communication networks 118 to the client subsystems 116 and the issuer
subsystems 120.
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[0045] In some embodiments, the CIS 101 may include a processor 102, a power
supply 104,
an input/output "I/O" component 106, communications 108, memory 110, a crypto
wallet 112
and data representing one or more values from the distributed ledger 114
(these values may be
stored in a memory, e.g., memory 110). I/O 106 can include an input component
capable of
receiving client input (e.g., a mouse or keyboard), and may further include
one or more outputs
(e.g., a video display), that may be capable of transmitting (e.g.,
displaying) information to a
client. CIS 101 may also include a variety of software and hardware interfaces
(e.g., web
interface, graphical client interface).
[0046] In some embodiments, the I/O 106 may enable the CIS 101 to communicate
with
other computing devices (e.g., web servers). The memory 110 storage medium may
include
flash memory, a hard-drive, volatile memory (Le. SRAM, DRAM), read-only memory
(ROM),
optical disks, random-access memory (RAM) and the like.
[0047] In some embodiments, the communications component(s) 108 may allow the
CIS to
communicate with one or more subsystems via network 118. This may be
accomplished by
communications component 108 utilizing one or more suitable data communication
protocols
(e.g., WAP, TCP/IP, HTTP, etc.) to transmit, receive, and interpret data.
[0048] In some embodiments, the network 118 may be a wireless (e.g., WLAN,
cellular,
satellite) network or a wired network or a combination thereof. The
communication network 118
may further comprise a variety of devices (e.g., routers, servers, storage
devices, bridges, etc.)
and may employ a variety of protocol types.
[0049] In some embodiments, the processor 101 may run one or more software
applications
that may include operating system applications, firmware applications,
communication
applications (e.g., web applications or native applications to interact with
client and issuer
subsystems and facilitate loan processing). The processor 101 may be
configured to fetch and
execute computer-readable code and instructions and may be implemented as a
central
processing unit (CPU), microprocessor, digital signal processors, state
machines, and the like.
= The processor 101 may be closely coupled with memory 110 elements through
one or more
system buses.
[0050] In some embodiments, subsystems (e.g., Issuer Subsystem 120, Client
Subsystem
116, Admin Subsystem 206) may store a distributed blockchain ledger 212 and a
crypto wallet
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(e.g., see 112 in FIG. 1) which may allow the subsystems to interact with one
another using one
or more cryptocurrencies in a secure, reliable, and expedited fashion.
[0051] In some embodiments, clients interacting with the CIS 208 may be
provided the crypto
wallets and accounts that may be hosted on the CIS to assist the performance
of the functions
.. described herein. These crypto wallets may allow the subsystems to access
peer-to-peer
networks of computers through which the distributed ledgers may be stored and
managed. In a
non-limiting example, a layer of complex cryptography may be applied and
virtualized data
token protocols may create, store, transfer, and manage ownership of assets
(e.g.,
cryptocurrencies, financial instruments, etc.). The virtualized data token
protocols may be able
to decrypt transactional data in order to track and verify transactions by
comparison to, and
analysis with, previous data stored on the blockchain ledger (e.g., 114).
Smart contracts rule
engine 210 leveraging the blockchain ledger 212 may be coupled with the crypto
wallets
enabling the performance of certain functions through event-driven code.
[0052] In some embodiments, the Ethereum blockchain may be used to write smart
contracts
that execute onboarding (appending documents to the chain), issue loaned
funds, invest in
financial instruments, and liquidate or close out positions once triggered by
a given event. In
other embodiments, the vendor of choice for smart contracts may depend on the
enhancements
in scale, flexibility, transactions times, and/or fees provided by smart
contracts. Other vendors
that will best suit the required use case will be chosen, including, but not
limited to Monax,
Symbiont, Hyperledger, Sawtooth, or Quorum.
[0053] In some embodiments, the CIS 101 may be implemented via a variety of
computing
systems (e.g., laptop computer, desktop computer, mainframe computer, a
server, cloud-based
environment, etc.). Any embodiments described herein may be hardware based,
software
based, and/or a combination of both. Further, embodiments described herein may
be
implemented by means of specifically configured, special purpose computer
hardware.
[0054] In some embodiments, multiple clients may access the CIS 101 via a
multitude of
devices (e.g., portable computer, digital assistant, mobile device, tablet
device, etc.) and may be
accessed, for example, through a web browser, an order management system
(OMS), or an
application programming interface (API). The client subsystems 116 and issuer
subsystems 120
may include components similar to CIS 101. The client subsystems and the
issuer subsystems
may communicate through the communication network 118.
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[0055] Referring now to FIG. 2, there is provided a flow diagram depicting an
example
embodiment of the present disclosure which utilizes a peer-to-peer
communication network 118
to transfer and store financial transaction data representative of one or more
parts of the
distributed blockchain ledger 212 on the clients' computing device(s). This
may act as a
distributed database, and securities created by issuers, as well as records of
security ownership
218, loan transaction provisions 216, and any associated documents may be
embedded to the
blockchain ledger 212.
[0056] In some embodiments, this distributed blockchain ledger 212 may be an
append-only,
immutable database that may store all of the information and details of the
aforementioned
products, and a timestamp for all executed actions that ever occur on the
system 208.
Consensus protocols (e.g., proof of work, proof of stake, proof of activity,
proof of ownership,
proof of capacity, proof of burn, etc.) utilized by the cryptographic wallets
may verify these
transactions. The crypto wallet 112 may employ high-grade encryption protocols
such as
Transport Layer Security (TLS) utilizing hashing algorithms 220 for appendage
and public-key
infrastructure cryptography (PKI) to create, manage, distribute, use, store,
and revoke digital
certificates (e.g., certifications indicating authorization).
[0057] In some embodiments, security documents 222 may pass through an
encryption layer
which may include a hashing algorithm 220 such as Secure Hash Algorithms 1, 2,
and 3 (SHA
1, SHA 2, SHA3) before being transferred to, and stored at, the distributed
blockchain ledger
212 as embedded data 214. Successful completion of smart contract 210
execution may initiate
a process which may transfer security ownership, onboard issuers, onboard
clients, and
onboard products, and which may be implemented through the CIS system 208 or
added to the
crypto wallets (e.g., see 112 in FIG. 1). In certain embodiments, the crypto
wallets will mandate
the use of multi-factor authentication 209 in order to control access to the
node network in order
to add data blocks. A node network may refer to a collection of nodes that can
read and write to
the blockchain, (e.g., use the Ethereum Virtual Machine). A full node may have
to download the
entire blockchain and validate the chain. Every node may possess a copy of the
blockchain, or a
partially validated subset thereof (e.g., a "light node").
[0058] In some embodiments, when the distributed blockchain ledger 212
receives appended
data, appended data may be signed using asymmetric cryptography techniques
(e.g., public key
cryptography). Each crypto wallet (e.g., see 112 in FIG. 1) may store: i) a
public key which may
be available to all nodes (clients) on the network; and ii) the clients' (a
private key associated
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with the client to whom each crypto wallet belongs) private key. These keys
may serve different
functions: the public key may be used, for example, in the form of a send-to
address and may
be predominantly used to encrypt data, while the private key may be used to
authorize or
decrypt encrypted in order to allow access data for access, and to digitally
sign blocks of data
later appended to the blockchain ledger 212.
[0059] It will be understood that many various alterations or modifications
may be made to
the system and methods involved without deviating from the scope of the
embodiments
described herein. Although example embodiments may utilize a decentralized
ledger, some
embodiments may include a centralized blockchain ledger, a centralized
authority not
administering the blockchain ledger to process transactions, etc.
[0060] In some embodiments, the CIS 208 may process loans in a
cryptocurrency, rather
than in fiat money, and may invest this distributed ledger digital asset in
one or more investment
vehicles, which may be stored on a distributed database in a decentralized
network. The
distributed ledger technology (DLT) network may utilize a private permissioned-
based ledger
which may enable issuer subsystem and CIS 208 to read and write permissions to
append
blocks to the distributed blockchain ledger (e.g., 212).
Issuer Onboarding
[0061] In some embodiments, securities created in the CIS system will
comply with all
regulatory rules, including, but not limited to, Blue Sky laws, FINRA,
FINTRAC, SEC, BSA, and
international requirements. The liability may be on the issuers to ensure anti-
money laundering
due diligence and compliance with Know-Your-Client (KYC) rules in their
respective operating
jurisdictions.
[0062] In some embodiments, individual entities who wish to become a part of
the CIS 208
may apply to become issuers, data pertaining to issuers may be stored in
issuer subsystem
(202). The application will be available on the CIS and the entities will need
to upload specific
documents pertaining to the successful onboarding of each issuer. The CIS 208
may contain
instructions functional to provide an application (i.e., enrolment) process by
which individual
entities may request to become 'issuers' for the purposes of the CIS 208. Such
application
process may be provided via the CIS (e.g., via a client interface device or
website), and may
require each client to successfully upload a specific set of documents in
order to execute a
successful onboarding process.
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[0063] In some embodiments, one or more administrators 206 may vet each
application and
may decide whether the documentation provided is sufficient to meet the
standards and norms
set out for the jurisdictional regulations in each region the CIS 208 operates
¨ this process may
be performed via an admin subsystem 206 automatically, when the documentation
and
information supplied to it are in-line with the previously set rules of
compliance and KYC/AML
standards. If a scenario is outside the standard rules for document and
information gathering
that is given to the admin subsystem 206, then human intervention may be
required and the
admin subsystem 206 will alert the issuer subsystem 202 with a notification
that manual review
is mandatory and the admin system cannot make a decision based on the facts
presented.
These manual review administrators may, for example, consist of third-party
KYC/AML firms
that provide verification services on a contract basis to the CIS 208 or may
be a group
consisting of board members from established approved issuers.
[0064] In some embodiments, documents and forms submitted via issuer subsystem
202
may be stored by the CIS on the distributed blockchain ledger 212. The
administrators of CIS
may be able to review the information submitted, and if accepted, may be able
to issue a unique
identifier associated with the issuer (e.g. an "IssuerlD") which will act as a
unique primary key ¨
this process may be performed via the admin subsystem 206.
[0065] In some embodiments, upon successful completion of the onboarding
process, issuer
subsystem 202 may determine that the onboarding process has been successfully
completed,
and may issue securities. All issuers subsystems 202 may be mandated to
provide at least one
primary security and a guaranteed investment vehicle, which may enable clients
to issue
commands (e.g. via client subsystem 204) to withdraw their principal monies at
the end of the
term of a particular investment vehicle.
[0066] In some embodiments, other investment vehicles may be introduced by
issuer
subsystems 202 including, but not limited to, debt securities, equity
securities, guaranteed
investment vehicles, term deposits, and any other securities that comply with
governmental laws
and regulations. Each investment vehicle introduced by issuer subsystem 202
may be
appended to the distributed blockchain ledger 212 along with data outlining
ownership 218,
identifying the issuer(s) 202 regulatory rules 216, and document information
214 pertaining to
the security. In other embodiments the onboarding can be instituted by a smart
contract rule
engine 206 by pre-specifying the required documents and entity type for a
successful issuer
subsystem 202.
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[0067] In some embodiments, the same logic may be applied by issuer subsystem
202 in
order to create new security offers. Documentary data from issuer subsystem
202 outlining the
details of each newly created security may be appended to the distributed
blockchain ledger
212. The issuer may be supplied a public key address and a private key for the
usage of their
crypto wallets. This public key address may link the issuer to the IssuerlD,
and this ID may be
embedded into all data tokens and distributed blockchain ledger 212 entries.
[0068] In some embodiments, the issuer may incorporate the CIS 208 to use
as its service
via a website, app, or any other suitable consumer facing interface. A client
wishing to utilize the
CIS 208 may do so from the issuers' client interface which may enable clients
to complete
various steps outlined herein. In some embodiments, instead of paying the
issuer directly, the
client may direct loan payments to be made via the CIS.
Client Onboarding
[0069] Referring now to FIG. 3, there is provided a flow diagram depicting an
example
onboarding procedure according to some embodiments. In some embodiments, an
onboarding
procedure 302 must be completed before a client may interact with the CIS
platform 208. A
request may need to be sent by a client via the client subsystem 116 to access
the platform and
the distributed ledger. This may, as a non-limiting example, be in the form of
an application
similar to the issuer requiring identity documents to be provided. The client
may complete such
upload via, for example, a graphical client interface generated by the CIS 208
and transmitted to
a client output (e.g., computer monitor, phone screen, or audio alerts, etc.).
The onboarding
procedure may require the client to supply basic identifying information
(e.g., full name, address,
contact medium, password, etc.), personal information (e.g., social insurance
number), and
bank information adequate to open up a loan/bank account (e.g., loan payout
amount, loan
term, loan payment period, loan payoff currency (i.e. USD, CAD).
[0070] In some embodiments, several electronic contract documents (e.g.,
terms of service,
privacy policy, loan agreement, pre-authorized debit (PAD) agreement, and
power of attorney
agreement to invest funds on behalf of client(s) may be processed
electronically using e-
signatures (PKI) or similar technology. In some embodiments, the issuer
subsystem 202 may
vet each application and may decide whether the documentation provided is
sufficient to meet
.. the standards and norms set out for the jurisdictional regulations in each
region the CIS 208
operates ¨ this process may be performed via an issuer subsystem 202 interface
automatically,
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when the documentation and information supplied to it are in-line with the
previously set rules of
compliance and KYC/AML standards. If a scenario is outside the standard rules
for document
and information gathering that is given to the subsystems, then human
intervention may be
required and the issuer subsystem 202 will alert the client subsystem 204 with
a notification that
manual review is mandatory and the admin system cannot make a decision based
on the facts
presented. These manual review administrators may, for example, consist of
members from the
issuer's KYC/AML department that provide verification services for all issuer
transactions. Upon
successful completion, client may be assigned a client identification value
(ClientID) which may
uniquely identify the account and may be used for loan withdrawals and
security purchases.
[0071] In some embodiments, documents supplied by clients to the CIS 208
(e.g., via client
subsystem 204) may be embedded to the distributed blockchain ledger 212 along
with
identifiers of any related accounts, ClientID, and any data tokens associated
with ownership of
any investment vehicle. The ability to access the blockchain ledger and the
immutability of the
ledger may allow for a concise and transparent audit trail enabling compliance
and regulatory
authorities to undertake any necessary review.
[0072] In some embodiments, each client registered on the network may
have access to their
own cryptographic wallets 112 in order to access information on the read
and/or modify data
stored on the distributed blockchain ledger 212. This information may be
presented to the client
and/or issuer via a GUI generated by the CIS 208 and transmitted to a client
interface.
Graphical Interface
[0073] In some embodiments, the CIS 208 may allow client subsystem (e.g., 116,
204) to
determine how a client's credit score may be affected (e.g., by payment
history, length of time
credit vehicle is held, utilization rate, amount of debt, etc.) and what
factors contribute to, and
modify, the credit score. This may be accomplished by, for example,
calculating a plurality of
performance metrics affecting the credit score (e.g., whether payments were
made on time,
whether payments were for the complete amount due, how many different credit
vehicles such
as credit cards the individual owns, etc.) from the real-time financial
transactions, periodically
retrieving updated credit reports, and providing a historical timeline of the
calculated credit
scores and plurality of credit score parameters, which can be displayed on a
graphical client
interface. The visual representation of how credit information is affecting
the credit score, and
most importantly, the impact of specific actions affect the credit score and
how to alter clients
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CA 3023325 2018-11-06
habits in order to improve the credit score may be a core feature of the CIS
208. The data
presented to the client will be dynamically created and tailored for the
modern consumers' omni-
channel experience (e.g., a consistent client experience across multiple
device types such as
computer, laptop, mobile phone, etc.).
[0074] In some embodiments, the CIS 208 may cause a pie chart to be displayed
via a client
interface. When a client causes an interaction with elements of the displayed
pie chart (e.g., via
a mouse cursor or a tap on a touch screen) certain performance metrics may be
displayed
which may contain detailed explanations of the category of data represented by
the portion of
the pie chart and their impact on the overall score. These performance metrics
may be
interpreted by the CIS processor 102 when any loan origination occurs (e.g.,
312, 608, and 708)
(e.g., a client gives access, at time of loan origination, to scrape said
client's credit report and
other financial information and process them via the CIS 208 by particularly
configured
computer instructions to create useful visual representations for the client's
specific financial
situation).
[0075] In some embodiments, the issuer may retrieve these reports from credit
bureaus and
may append this data to the distributed blockchain ledger (e.g., 212) along
with the approval
and confirmation of the loan contract. The CIS (e.g., 208) may then access
this data by first
decrypting the data using a private key and may then parse the report to
extract various data
records representing, for example, trade lines, debt, bankruptcies, payment
frequency, and/or
record delinquencies. Each performance metric represented by the various
extracted data
records may be displayed, for example, as a slice of a pie chart shown on a
client interface. The
size of each slice of the pie chart may be proportionate to the impact of the
represented
performance metric on the client's credit score.
[0076] In some embodiments, the CIS (e.g., 208) may generate and analyze
aggregated
reports in the event that a client repeatedly "rolls over" their loan with the
CIS. Rolling over may
refer to, for example, reinvesting funds from a mature security into a new
issue of the same or a
similar security. CIS (e.g., 208) may display a time series analysis of these
credit reports, credit
scores, and credit summaries. All of these reports may be stored as encrypted
information on
the blockchain ledger, or may be linked to a dedicated server running a cloud-
based system to
access the report through PKI.
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[0077] In some embodiments, the time series analysis may provide different
views of the data
in the form of a main dashboard which may highlight underlying trends and
features of the data
not immediately apparent to the client. These views may enable, as non-
limiting examples,
filtering down by points of interest, tabulation, and other exploratory
techniques which may allow
.. the client to more easily take note of and comprehend various important
data trends
represented by the analytics data. In various aspects, the performance metrics
can include one
or more of: debt-to-income ratio; credit line utilization; number of
transactions; growth in savings
or debits; financial risk ratios; balance-to-limit; and debt-to-limit.
Installment Loan ¨ Creation
[0078] Referring now to FIG. 3, there is provided a flow diagram depicting an
example
process for a client securing a loan by means of the CIS. At 302, the process
may begin by
client completing a client onboarding procedure (e.g., via client subsystem
116), which may
proceed as described above. Information submitted by the client may be
transmitted by client
subsystem to the CIS via a communication network (e.g., 118).
.. [0079] In some embodiments, the information submitted by the client may be
encrypted
using, for example, SHA-256 hashing algorithms and may be appended to the
distributed
blockchain ledger (e.g., 212). In certain embodiments, instead of embedding
large documents
submitted by the client to the distributed blockchain ledger 212, a data token
(which may
represent ownership of the data files containing submitted documents) may
include a cipher that
may function to provide access to these documents, which documents may be
stored in a
memory (e.g., a secure cloud-based database connected to the CIS). Encryption
of these
documents on the cloud may employ, for example, AES-256 bank/military grade
database
storage encryption. At 304, an admin fee may be charged, for example, to cover
expenses
associated with maintaining platform sustainability.
.. [0080] In some embodiments, once the funds have been received and, if the
embodiment
requires, the account has been approved, the CIS may complete the account
creation process
308 by, at 310, decrypting and transmitting the e-signed contract documents to
one or more
issuers. This may authorize a loan to be originated under the client's name.
At 306, the client
may be notified of the new account creation.
.. [0081] In some embodiments, issuers may originate one or more loans at 312
and may
transfer the cryptocurrency (e.g., via the issuer subsystem crypto wallet 112)
to a crypto wallet
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CA 3023325 2018-11-06
address in the CIS. At 308, once the loan funds have been received, the CIS
may notify credit
bureaus of the new credit account for the client. The notification sent to the
credit bureaus may
include identifiable information (e.g., information sent in Metro2 format
(i.e., the current standard
format for reporting credit), or, if the systems of the credit bureaus are
capable of utilizing
distributed ledger technology, the new credit account information may be
appended to this
ledger, assuming the CIS system has been permissioned for write-access
thereto.
[0082] In some embodiments, at 316 CIS may then invest the funds received from
the client
at 314 (e.g., using power of attorney) into securities made available by the
issuers (financial
institutions). These securities may include but are not limited to debt
securities, equity
securities, guaranteed investment vehicles, term deposits, and any other
securities that comply
with governmental laws and regulations. The client may be encouraged to invest
in a
guaranteed investment vehicle to secure his principal and not lose the savings
he is making
throughout the year. This will open ao investment account 318 for the client
in the issuers
subsystem.
[0083] In a non-limiting example embodiment, the CIS 208 may convert the
securities the
issuer onboards into virtual data tokens, or in some instances virtual data
tokens representative
of underlying securities, which can then be transferred from the issuer to the
client through
crypto wallets. The ownership of the security gets transferred, the virtual
data tokens get
updated with the new owner, and this information, along with all transactional
details gets
.. appended to the distributed blockchain ledger (e.g., 212). At 322, the CIS
may then wait for
confirmation from the issuer that the funds have been invested. Upon receipt
of such
confirmation at 324, client may be notified at 326 of the investment
information (e.g., via a GUI
on a client interface).
[0084] It will be understood that a portion or all of the aforementioned may
be executed by
use of smart contracts (e.g., 206), with the initiation, performance, and
confirmation or rejection
of the contract appending to the distributed blockchain ledger 212 maintaining
immutable logs of
all actions performed by all parties.
[0085] Referring now to FIG. 4, there is provided a flow diagram depicting an
example
process for reinvesting and/or settling a loan, according to some embodiments.
Upon successful
loan creation, the CIS may perform and supervise monthly repayments required
for the client to
settle the loan within a year. In an embodiment, the flow/settlement of funds
can be
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CA 3023325 2018-11-06
accomplished using fiat currency. Loan payoff payments may refer to a loan
principal amount
plus an amount of interest agreed in the terms of the original loan. At 402,
the process may
commence when the CIS sends a request for the electronic fund transfer (EFT)
to the client's
bank. At 404, the bank may process the EFT request and may release the
requested funds at
406. In another embodiment, the client may make payments via a credit card
processor where a
fiat money asset network already exists to settle transactions. The CIS may
allow clients to
make loan payments via a variety of payment methods and may enable the client
to pay off the
loans in a manner they prefer.
[0086] In some embodiments, after the CIS has received the funds, multiple
processes may
occur simultaneously or in short succession: at 408, the CIS may convert the
fiat currency into
cryptocurrency using the open-market exchange rates and then may forward the
funds to the
issuer via issuer subsystem, or depending on the issuers preference, retain
the fiat currency
and forward the funds in their current state. At 410, funds may be applied to
reduce the client's
loan balance ¨ the amount of the reduction may correspond to the EFT or credit
card payment.
The issuer may then reduce the client's balance.
[0087] In some embodiments, at 414 the CIS may simultaneously (or in short
sequence)
internally reduce records of balance on the client's account in concert with
the reduction of the
loan amount at 410. The CIS may then, at 412, notify the client (e.g., via
SMS, push notification,
electronic mail, etc.) that the funds have been received by the partner
financial institution and
applied to the outstanding loan amount.
[0088] In some embodiments, at 416, the CIS may notify one or more credit
bureaus of the
successful payment, the reduced loan balance, and whether the payment was
completed in a
timely manner (this notification may be immediate or may be completed on a
scheduled basis).
[0089] In some embodiments, at 418 while the CIS is performing one or more of
the above-
mentioned processes, the issuer subsystem may send a confirmation of the
payment to the CIS.
Upon receipt of such confirmation, CIS may, at 420, send an additional
notification to the client.
This notification may include, for example, the remaining balance of the loan,
the balance in the
client's account, and next month's payment amount. Once the issuer subsystem
receives the
funds, it may maintain the liability to hold, spend, or convert the funds to
local currency.
[0090] In some embodiments, the CIS will act as an intermediary between the
client
subsystem and the issuer subsystem, in order to form a loan agreement and
collect the fiat
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CA 3023325 2018-11-06
money (e.g., government currency-denominated payment) which may be used to pay
off the
loaned funds. These funds may then be sent to the issuer to pay off the loan
in a distributed
ledger digital asset (e.g., cryptocurrency), or a lesser value due to any fees
(e.g., fees
established in the terms of service and/or loan contract).
[0091] In a non-limiting example, after the fifth but before the last
(twelfth) monthly payment
= cycle, the CIS may cause notifications to be sent to clients explaining
the renewal process along
with the benefits of renewing the service along with informative content
(e.g., "FICO spokesman
Craig Watts says that 35% of the score is based on the history of your credit
and 15% is based
on the length of your credit account). This information may then be provided
to the client who
may be urged to "roll the loan over" (see definition of rollover above) in
order to keep improving
these statistics on their credit history.
[0092] In some embodiments, if loan payments are being made in cryptocurrency,
the
process may begin as depicted at 502 of FIG. 5, when the client deposits funds
into their crypto
wallet (e.g., purchasing out on open market and sending them to the public key
address, or
having payroll deposited straight into the wallet). On the agreed date
specified in the loan
agreement, the smart contract (e.g., 206) may, at 504, initiate a loan payment
withdrawal. The
CIS may then request that a monthly amount be sent to its crypto wallet at
506, and the client
subsystem may use a public key from the CIS to transfer the funds. At 508, the
client subsystem
may verify the funds by using its private key and the funds may be released to
the crypto wallet
of CIS.
[0093] In some embodiments, after the CIS has received the funds at 510, funds
may be
applied to reduce the client's loan balance ¨ the amount of the reduction may
correspond to the
cryptocurrency payment. There will be no need to conversion as the funds will
be deposited into
the issuer's crypto wallet 112 directly. The process flow subsequently will
follow the same logic
as in FIG. 4 starting from 408
Continuation of Service - Reinvesting
[0094] Referring now to FIG. 6, at 602 if at the end of the loan term a client
has decided to
continue using the CIS without withdrawing the original principal, they may
need to sign a new
set of contracts and pay an updated fee at 604. At 604, once updated client
information and
contracts have been received, one or more smart contracts may be executed at
606 and the
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CA 3023325 2018-11-06
documents pertaining thereto may be encrypted and posted to the distributed
blockchain ledger
212.
[0095] In some embodiments, at 606, the digital storage location of the
documents may be
passed downstream to the issuer subsystem, and at 608 the issuer subsystem may
instruct the
issuer to originate a new loan and liquidate the investment under the same
client account. This
may allow for the account age to lengthen rather than restart. At 610, the
funds may be received
by the CIS on behalf of the client via a crypto wallet 112 in the CIS and the
CIS may begin a
process to initiate renewal of the account. In a non-limiting example, the
following processes
may be executed simultaneously or in short succession: first at 614, the CIS
may notify the
client that the funds were received (e.g., via GUI); next, at 616, the CIS may
notify the issuer to
invest the funds back into a new security and at 618 the investment may be
completed; next,
CIS may notify the credit bureaus of a new loan taken out on the client's
account and/or, if
possible, append this data to the distributed ledger 212.
[0096] In some embodiments, the issuer will receive the combination of
the original principal
and the new loan into a crypt wallet and may initiate the smart contract to
transfer the new
security investment to the client subsystem. This new investment information
may be sent to the
CIS, and at 620 the new digital asset may have its ownership transferred to
the client. The
information will flow upstream to the CIS 622 and be passed to the client 624.
[0097] In some embodiments the same process may be achieved through using fiat
currency
and utilizing current payment infrastructures such as EFT's.
Continuation of Service - Withdrawal
[0098] Referring now to FIG. 7, there is provided a flow diagram depicting an
example
process for processing a client's decision to continue while withdrawing the
original principal via
the CIS. At 702, a client may decide to reinvest or withdraw funds from the
CIS. If the client
decides to continue the use of the services provided by the CIS, but wishes
to, for example,
withdraw the original principal, the client may need to sign a new set of
contracts and pay an
updated fee at 704. This may be accomplished by executing a process similar to
that depicted
in FIG. 6 and described above.
[0099] In some embodiments, once the updated information and contracts have
been
received 704, the smart contract may execute and encrypt the documents and
post this data to
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CA 3023325 2018-11-06
the distributed blockchain ledger 212. At 706 the location where the encrypted
documents have
been stored may then be passed downstream to the issuer which may cause the
issuer to
originate a new loan contract and liquidate the investment at 708. The new
loan contract and
liquidated investment may be under the same client account, which may allow
the account to
remain active rather than restart (thus bettering the client's credit
history).
[00100] In some embodiments, at 710 the CIS may receive the funds on behalf of
the client
and may begin the renewal account initiation. The following processes may be
executed
simultaneously or in short sequence: at 714, the system may notify the client
that the funds
have been transferred to their crypto wallets, and that the client may now
withdraw said funds
into fiat currency or use the funds in the wallet as-is; at 716, the CIS may
direct the issuer to
= invest the loaned funds back into a new security selected by the client;
at 712, the CIS may
notify the credit bureaus that a new loan has been taken out on the client's
account (e.g., in
METRO2 format), and/or, if possible, append data reflecting the new loan to
the distributed
blockchain ledger 212.
[00101] In some embodiments, at 718, the issuer may receive the new loaned
funds and
invest them in the new security. At 720 this new investment information may be
transmitted to
the CIS and the security data token may be transferred into the client's
crypto wallet and the
CIS will send 722 this information upstream to the client 724. After this, the
processes outlined
by FIG. 4 or FIG. 5 may repeat for a pre-determined period of time (e.g., t,
where t is the length
of the term). If the client selects to renew the account, the process may loop
for t times.
Final Payment - Closure
[00102] Referring now to FIG. 8, there is provided a flow diagram depicting an
example
process for terminating an account in the CIS according to some embodiments.
At 802, upon
successful completion of the term of a loan initiated via the CIS, (e.g., the
process in FIG. 4 has
completed 11 cycles); the CIS may initiate and request the client subsystem to
process the final
payment, under the client's instruction to terminate their account. At 804 the
client completes
the payment, and, if using fiat currency to make the payments, the client's
bank may receive the
request for the final EFT and may release the final funds 806. In another
embodiment, the CIS
may execute a contract for the client subsystem to transfer the final payment
from the client's
crypto wallet to the public key address of the CIS crypto wallet.
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CA 3023325 2018-11-06
[00103] In some embodiments, at 806 the client subsystem may transfer
ownership of the
=asset to the CIS temporarily as it proceeds to liquidation. When asymmetric
cryptography has
been processed successfully, and the final funds have been received 808, the
funds may be
transferred to the issuer subsystem, reducing the client's balance to zero
($0) and settling the
loan 810.
[00104] In some embodiments, at 814 the CIS may update the client's loan
balance in the CIS
(e.g., on the account dashboard) to $0. At 812, a notification may be sent to
the credit bureau
regarding the settled loan and indicating a CIS account with good credit
standing. Throughout
the process the client may be notified 816 by the CIS of the transfers of
funds and settlement of
the loan.
[00105] In some embodiments, at 818, to finalize the process, the CIS may send
a request to
the issuer subsystem to liquidate the security investment and transfer its
ownership to the issuer
subsystem crypto wallet. At 820, the issuer, upon receiving the request and
after proper
assessment, may liquidate the security on behalf of the CIS and the client.
The account with the
issuer may then be closed. At 822, after the liquidation process, the funds
may be transferred to
the CIS, and thereafter ultimately transferred to the client at 824. At 824,
the account may be
closed based on the client's request. Finally, at 826, the client may receive
the final funds
accompanied with a notification of the closed account and settled loan.
[00106] Revolving Loan
[00107] One of the attributes that credit ratings agencies use to score
individuals on their risk
score is the type of credit that they have. A broader variety of credit,
coupled with on-time
payments, exemplifies that the individual is capable of managing multiple
streams of debt. If the
variety of debt is properly managed, this can have a significant positive
impact on the rating
models the CRA's use when evaluating a person's risk level. Therefore, to
improve a credit
score, multiple methods can be utilized. Previously, instalment loans with
fixed payments were
used to pay back the loan while investing the funds into a GIC. The approach
described herein
can increase an individual's credit score, with all other factors remaining
constant.
[00108] In some embodiments, another way the CIS can be used to improve the
credit score is
by using a revolving loan to pay off "predictive payments" (e.g., payments
that can be accurately
predicted due to their consistent quantum and schedule). A modern-day consumer
may have
multiple monthly bills, including but not limited to, shelter (rent and
mortgage),
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telecommunications (phone and internet), utilities, and other potential items
such as
subscription boxes, subscription groceries, and entertainment (Netflix,
Spotify, etc.).
[00109] The following example embodiments a credit card payment to illustrate
some of the
processes. It will be understood that any revolving loan or similar financial
vehicle may be used
so long as the loan repayments can be made at will versus according to a set
repayment
schedule, and the borrower of the loan (e.g., the client) can draw down the
funds available if the
loan ceiling has not been reached.
[00110] Three (3) non-limiting example scenarios are provided involving use of
a revolving
loan to improve a client's credit score. The first non-limiting example
scenario illustrates a case
where the bill or payment is consistent over time and will not change in the
near twelve (12)
month period. This can include, for example, a rent or mortgage payment with a
locked in
amount, or an internet bill with unlimited bandwidth so as to not incur
overage charges. The
second and third non-limiting example scenarios illustrate cases involving
inconsistent bill
payments, such as utilities that might fluctuate between seasons. FIG. 9
through FIG. 11
illustrate the three non-limiting example scenarios and will be described
below.
[00111] Referring now to FIG. 9, there is provided a flow diagram depicting an
example
process for a client securing a revolving loan by means of the CIS. At 902,
the process may
begin by client completing a client onboarding procedure (e.g., via client
subsystem 116), which
may proceed as described in 302, including information submittal 904, admin
fees 904,
information encryption 902, blockchain appends 906, account approval 906,
client notification
908, and loan creation 910. The process, as depicted, may include receipt
and/or processing of
information about the bill or payment to be replaced by the CIS, which may not
be depicted in
FIG. 3.
[00112] When the client is on-boarded, the CIS may require the client to
input: i) consistency
of bill or payment amount; ii) average bill or payment amount; and iii) bill
or payment issuer
information and permissions to access the bill amounts. If it is an internet
bill, for example, the
client may indicate: that it is an internet bill that does not change in
amount due monthly; the
provider (Rogers, Bell, Verizon etc.); the average bill amount, service
provider account number
(to pay the bill on clients' behalf); and a TOS that may provide digital
permissions to the CIS,
thereby enabling the CIS to pull the bill amount directly from the bill
provider (e.g., using APIs,
flat-files, or any other means available).
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[00113] If the payment is, for example, a rent payment the client may provide:
the rent amount;
indication that the rent will not change; and, rather than an account number
that the CIS will pay
on behalf of the client, a payment method that is suitable for the landlord to
accept the rent
payment (i.e. PayPal, e-transfer, crypto wallet). In other embodiments, once
the CIS has been
given access to the bill issuer's data on behalf of the client, it may perform
a twelve-month
trailing average calculation on all historic bill amounts and automatically
input a value (e.g., a
suggested payment amount) into this field.
[00114] In some embodiments, once the funds have been received and, if
required, the
account has been approved, the CIS may complete the account creation process
906 by, at
910, decrypting and transmitting one or more e-signed contract documents to
one or more
issuer subsystems. This may authorize a revolving loan to be originated under
the client's name
912. At 908, the client may be notified of the new account creation. The
example hereafter will
use a credit card to illustrate concept discussed above.
[00115] At 913, once the loan has been issued, the CIS may notify credit
bureaus of the new
credit account for the client. The notification sent to the credit bureaus may
include identifiable
information (e.g., information sent in Metro2 format, the current standard
format for reporting
credit), or, if the systems of the credit bureaus are capable of utilizing
distributed ledger
technology, the new credit account information may be appended to this ledger,
assuming the
CIS system has been given digital permission for write-access.
[00116] Once the loan has been issued, the information for exclusive usage may
be forwarded
by the issuer subsystem to the CIS 914. The credit card may only have one
purpose, which will
be governed and controlled by the CIS. This may ensure that no client
intervention may erode
the credit building objectives by overspending, not maintaining the optimal
balance, and not
paying on time.
[00117] Optimization of the credit utilization factor may be a prime objective
of the revolving
loan system. In order to achieve the applicable generally accepted optimal
credit utilization rate
(e.g., CRA's recommended 20%-30% utilization rate), it may be imperative to
employ a debt
prediction engine 211 to predict the bill or payment amounts, and execute one
or more credit
optimization processes issuing cards with limits that can sustain fluctuations
of the payments
and not drop below the recommended rate. To achieve this, the credit card
issued according to
the optimization process at 912 may have a credit limit of, for example, four
(4) times the
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CA 3023325 2018-11-06
consumer inputted payment amount. The inherent benefit of quadrupling the bill
payment
amount is that every time a payment is made by the CIS on behalf of the
client, the client's card
will reach the optimal utilization rate, every single payment.
[00118] As a non-limited and solely illustrative example, a rent payment in
the amount of
$1000 is due monthly and originates at 916 with the landlord requesting and
expecting the
payment. Since this was a rent payment amount that the client had inputted, no
bill pulling will
be required by 918 but will still be applicable if the consistent bill came
from an established
organization providing a service to the client where the CIS would have been
able to access the
information by itself. In 904 the payment time schedule would have been set
(e.g., first of the
month, last of the month, middle of the month, biweekly, etc.) and the CIS
activates the payment
process 920. The system first draws the needed funds from the client's bank to
ensure that the
credit card is left with no balance owing and no client funds available in the
system to be able to
pay off the revolving loan. This step occurs as an initial pre-step in order
to safe-guard against
losses.
[00119] At 922 the bill payment processes commence when the CIS sends a
request for the
electronic fund transfer (EFT) to the client's bank. The bank may, in
response, process the EFT
request and may release the requested funds. In another embodiment, the client
may be able to
make payments via a variety of payment methods which may enable the client to
pay off the
loans in a manner they prefer. If the fiat currency option is not chosen, the
CIS may draft a
smart contract to be automatically executed monthly on the specified repayment
date. This
smart contract may include the specified rent amount, and may pull the funds
from the crypto
wallet the client has provided. Multiple processes may occur simultaneously or
in short
succession: the CIS may convert the crypto currency into fiat currency using
the open-market
exchange rates and then may forward the funds to the issuer via issuer
subsystem.
[00120] Once the funds have been received, the CIS may pay off the bill in
full using the credit
card issued 920. This may be completed by utilizing currently available
infrastructure for bill
payments, for example by using a financial institution's web banking to input
the client's account
number and forwarding the funds to the billing organization. This may also be
accomplished by
utilizing a partnership with the bill issuers to directly interact with the
CIS. If the payment is, for
example, rent, as in our example above, the CIS may charge the credit card
through a payment
merchant, and now, as it is holding the funds, the CIS may transfer the funds
to the landlord in
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any means they find suitable (e.g., e-transfer, PayPal, or bank transfer). Any
fees associated
with money transfers may be covered by the client system.
[00121] In some embodiments, at 924 while the CIS is performing one or more of
the above-
mentioned processes, the bill/payment subsystem may send a confirmation of the
payment to
the CIS. Upon receipt of such confirmation, CIS may, at 926, send an
additional notification to
the client. This notification may include, for example, the outstanding
balance of the loan, the
due date, and days outstanding. In some embodiments, at 927, the CIS may
notify one or more
credit bureaus of the credit usage, the debt owing, and whether the payment
was completed in
a timely manner (this notification may be immediate or may be completed on a
scheduled
basis). Most importantly, the report to the CRA will show a 25% perfect
utilization rate of credit.
[00122] At 928, funds received in 922 may be applied to reduce the client's
loan balance ¨ the
amount of the reduction may correspond to the EFT or crypto payment. In the
case of the
cryptocurrency, the digital tokens may not need to be converted, but may be
transferred to the
issuer subsystem right away, once again utilizing asymmetric cryptography to
sign, verify, and
authorize the transfers. In case of fiat currency, or converted crypto
currency, the funds will be
sent to the issuer of the credit card and the issuer may then reduce the
client's balance 930.
Once there is a payment processed, the CIS will report to the CRAs 932 that
the credit card has
been paid off and is in good standing. A randomly generated number (e.g., a
number between 2
and 7) may determine a delay (e.g., a number of days' delay) after which the
CIS may proceed
with sending out the credit card payment. This delay may imitate a human's
payment behaviour
and may avoid the appearance of automated payments when monitored (e.g., by
credit rating
agencies) as automated payments may have a suboptimal effect on credit
building.
[00123] It will be understood that a portion or all of the aforementioned may
be executed by
use of smart contracts (e.g., 206), with the initiation, performance, and
confirmation or rejection
of the contract appending to the distributed blockchain ledger 212 maintaining
immutable logs of
all actions performed by all parties.
[00124] Referring now to FIG. 10, there is provided a flow diagram depicting
an example
process for a client securing a revolving loan by means of the CIS when the
bill or payment is
above the threshold. It is understood that when the bill or payment is
available 1002 and the CIS
pulls the payment amount 1004 that the client has completed an onboarding
process that
mirrors the steps from 902 through 914 including information submittal 904,
admin fees 904,
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information encryption 902, blockchain appends 906, account approval 906, and
loan creation
910.
[00125] The only difference between the process depicted in FIG. 10 and FIG. 9
may be found
at 912 - the issuance of the credit card. Optimization of the credit
utilization factor may be a
prime objective of the revolving loan system. In order to achieve an optimal
utilization rate (e.g.,
CRA's recommended 20%-30% utilization rate), it may be imperative to predict
the bill or
payment amounts, and to issue cards with limits that can sustain fluctuations
of the payments
(e.g., fluctuations in the amount due) and not deviate from the recommended
rate. To achieve
this with an unknown bill or payment amount, the credit card issued at 912
that had a credit limit
of four (4) times the consumer inputted bill average may now, according to the
example
embodiment of FIG. 10, have a limit of three (3) times the client's inputted
average bill or
payment amount. The difference between quadrupling in 912 and tripling for
FIGS. 10 and 11
may be indicative of a conservative approach when reporting the credit
utilization rates to the
CRA and may ensure said rates never drop below a 30% utilization rate.
[00126] In some embodiments, to improve process efficiency, a threshold may be
set to
dictate the upper bound level that a bill or payment may fluctuate up to and
not have a
detrimental effect on the credit rating models of the CRAs. The bound of this
threshold is,
according to some example embodiments, 30% and may indicate the bill or
payment amount
relative to the total credit limit. If the client indicated, or the CIS
deduced, that an average
amount owing for a certain bill is $100, then the credit card issued in
accordance with this
example embodiment will be for $300. If a bill arrives for $50, the bill is
16.67% (50/300) of the
credit limit amount and may be processed in accordance with the example
process of FIG. 11.
Further, a bill below $90 (0.3 x 300) may be below the 30% threshold and may
follow the
example process of FIG. 11. Any bill above $90 may follow the example process
in FIG. 10
where the credit card will only be used for 25% of the purchase.
[00127] In some embodiments, if a bill with an unknown amount due (y) comes in
it can be
below or above the threshold. If it is above, the credit card issued may only
be used for 25% of
the bill amount (described later in 1016), and if it is below, the full amount
may be processed by
the credit card. If the bill is below, for example $70, the credit limit used
may be 23% (e.g.,
70/300) which may be a lot closer to the optimal credit utilization rate than
if we used the
previous issuance example of four times (4x) the average bill amount where the
credit limit used
would be 17.5% (70/400). Hence we can see why the lower multiple of credit
limit issuance may
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bring an advantage to irregular payments falling below the average bill
amount, optimizing the
credit utilization, while the payments above the average are optimized by
using 25% of the bill
paid by the card, while the remainder is paid by other means.
[00128] In an example embodiment, a utilities payment with an average amount
of $150 is due
monthly and originates at 1002 with the service provider requesting and
expecting the payment.
The information the client supplied in 904 may contain all details and
permission for the CIS to
access the information by itself 1004. In 904 the payment time schedule would
have been set
(e.g., first of the month, last of the month, middle of the month, biweekly,
etc.) and the CIS may
activate the payment process 1006. The system may first draw the required
funds from the
client's bank to ensure that the credit card is left with no balance owing and
no client funds
available in the system to be able to pay off the revolving loan. This step
may occur prior to
other steps in order to safe-guard against losses.
[00129] At 1008 the bill payment process may commence when the CIS sends a
request for
the electronic fund transfer (EFT) to the client's bank. The bank may process
the EFT request
and may release the requested funds. In another embodiment, the client may
make payments
via cryptocurrency. The CIS will draft a smart contract to run monthly on the
specified payment
date, with the specified bill amount, and will pull the funds from the crypto
wallet the client has
provided. Multiple processes may occur simultaneously or in short succession:
the CIS may
convert the crypto currency into fiat currency using the open-market exchange
rates and then
may forward the funds to the issuer via issuer subsystem in 1022, or send the
crypto currency to
the issuer system in the native token, also at 1022.
[00130] Since the bill that arrived in the non-limiting example above was for
$150 and, thus,
over the 30% threshold of the credit limit, the CIS may only use 25% of the
available credit limit
to pay the bill 1010. As previously mentioned, this will ensure our optimal
credit utilization is not
exceeded. The card limit that was issued is three (3) times the average bill
amount of $100, so
the credit limit is $300. This means $75 is 25% and this amount gets paid with
the credit card
1010, reducing the available funds down to $225 (300-75) 1012, and reporting
the balance and
activity to the CRAs at 1014.
[00131] In some embodiments, reporting the balance and activity to the CRAs
may be done
through the currently available infrastructure for making bill payments, for
example by using a
financial institution's web banking interface to input the client's account
number and forwarding
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the funds to the organization, or utilizing a partnership with the bill
issuers to directly interact
with the CIS. The bill issuer (e.g., the utilities company) may send a receipt
confirmation 1015
back to the CIS which may trigger the remainder of the amount to be paid via
EFT from the CIS
holding account 1016. Since only $75 dollars was paid from the credit card,
the amount
remaining may be $75 (150-75) and will be sent to the bill issuer 1016. The
bill may now be fully
paid with a final confirmation from the bill company coming to the CIS 1018.
[00132] To mimic human payment behaviours there may be a randomized day delay
(e.g.,
between two (2) and seven (7) days) before the CIS pays off the credit card
balance. At 1008 an
amount of $150 is pulled from the client, of which only $75 was used as EFT to
pay the
remainder of the bill in 1016. After the delay, the remainder $75 not sent to
the bill issuer is used
to pay off the credit balance 1020 of $75 that was paid in 1010. A
notification to the client is sent
at 1026 indicating that the both the bill and the credit card balance have
been paid off. The
issuer subsystem may receive the credit card payment at 1022, increase the
balance available
on the credit card, and a report may be sent to the CRAs indicating that the
balance has been
paid in full and there are no issues or delayed payments with this revolving
loan 1024.
[00133] It will be understood that a portion or all of the aforementioned may
be executed by
use of smart contracts (e.g., 206), with the initiation, performance, and
confirmation or rejection
of the contract appending to the distributed blockchain ledger 212 maintaining
immutable logs of
all actions performed by all parties.
[00134] Now referring to FIG. 11, in some embodiments, if an amount owing in a
bill is below
the threshold, the process may be quite similar to that of when it is above
(e.g., FIG. 10), the
processes from 1102 through to 1106 may mirror certain processes depicted in
the example of
FIG 10. The difference may be at 1110, when the credit card is used for the
full bill payment
rather than a part of it. The CIS may use the credit card to pay off the full
bill amount. This can
be done through the current infrastructure of bill payments, using a financial
institution's web
banking interface to input the client's account number and forwarding the
funds to the
organization, or utilizing a partnership with the bill issuers to directly
interact with the CIS. If the
bill is $60, the full amount may be sent to the bill holder 1112, thereby
reducing credit card
balance to $240 (300-60) 1113.
[00135] In some embodiments, the balance owing at 1113 may be reported to the
CRAs 1114
at an activity level of 3x-y/3x where y is the bill and x is the average bill
amount. In our scenario
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this will be 80% (240/300). This may be particularly effective because, as
previously explained
the lower bills are not a detriment to the credit history and may provide the
most efficient
process when the objective is optimization of the utilization rate. Following
a similar tactic
described above, the payment may be delayed for a randomized period (e.g.,
between two (2)
and seven (7) days) before being fully paid off at 1116. The issuer subsystem
may receive the
payment and reduce the balance owing to $0 at 1118, and the CIS may report the
activity to the
CRAs at 1120.
[00136] In some embodiments, if a client wishes to add more payments or bills
to the CIS
under their account, it may be most prudent to combine the bills or payments
into one card if
they are of the same payment schedule expectations. Such combinations of
payments or bills
may only be efficiently made when the schedule according to which said
payments or bills arrive
are similar.
[00137] For example, in some embodiments, the client may be prevented from
combining
different payment expectations schemes. In case of combinations, the new
service may be
added onto the existing, increasing the credit limit of the original credit
card. If the original
service had an average bill amount of $100, the credit limit is $300, and if
the new bill that the
client wishes to add has an average bill amount of $50, then the credit limit
of the original card
will need to be increased by $150 (50 x 3) from $300 to $450. Then, when both
payments are
pulled from their respective bill issuers, the combination (sum) of the bill
amounts will be used to
calculate the threshold limits. Following similar protocol, if the payment is
above the threshold,
the process in FIG 10 will activate, and if below, the process in FIG 11 may
commence.
[00138] In a non-limiting example, after the fifth but before the last (e.g.,
twelfth) monthly
payment cycle, the CIS may cause notifications to be sent to clients
explaining the renewal
process along with the benefits of renewing the service along with informative
content (e.g.,
"FICO spokesman Craig Watts says that 35% of the score is based on the history
of your credit
and 15% is based on the length of your credit account). This information may
then be provided
to the client who may be urged to continue using the credit card for bills or
regularly scheduled
payments in order to keep improving these statistics on their credit history.
[00139] It is understood that the collective steps shown in the figures are
illustrative and steps
may be modified, omitted, appended, substituted, removed and the order of
certain steps may
be altered while remaining within the realm of the present disclosure.
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[00140] Embodiments of methods, systems, and apparatus herein are described
through
reference to the drawings.
[00141] The discussion herein provides many example embodiments of the
inventive subject
matter. Although each embodiment represents a single combination of inventive
elements, the
inventive subject matter is considered to include all possible combinations of
the disclosed
elements. Thus if one embodiment comprises elements A, B, and C, and a second
embodiment
comprises elements B and D, then the inventive subject matter is also
considered to include
other remaining combinations of A, B, C, or D, even if not explicitly
disclosed.
[00142] The embodiments of the devices, systems and methods described herein
may be
implemented in a combination of both hardware and software. These embodiments
may be
implemented on programmable computers, each computer including at least one
processor, a
data storage system (including volatile memory or non-volatile memory or other
data storage
elements or a combination thereof), and at least one communication interface.
[00143] Program code is applied to input data to perform the functions
described herein and to
generate output information. The output information is applied to one or more
output devices. In
some embodiments, the communication interface may be a network communication
interface. In
embodiments in which elements may be combined, the communication interface may
be a
software communication interface, such as those for inter-process
communication. In still other
embodiments, there may be a combination of communication interfaces
implemented as
hardware, software, and combination thereof.
Other Applications
[00144] Potential applications that may be practiced in regards to some
embodiments are
described below. There may be other, different, modifications, customizations,
iterations, etc. of
the below example applications, and it should be understood that the following
is provided as
non-limiting, illustrative examples only.
[00145] Throughout the discussion herein, numerous references are made
regarding servers,
services, interfaces, portals, platforms, or other systems formed from
computing devices. It
should be appreciated that the use of such terms is deemed to represent one or
more
computing devices having at least one processor configured to execute software
instructions
stored on a computer readable tangible, non-transitory medium. For example, a
server
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configured to provide the CIS system can include one or more computers
operating as a web
server, database server, or other type of computer server in a manner to
fulfill described roles,
responsibilities, or functions.
[00146] The technical solution of embodiments may be in the form of a software
product. The
.. software product may be stored in a non-volatile or non-transitory storage
medium, which can
be a compact disk read-only memory (CD-ROM), a USB flash disk, or a removable
hard disk.
The software product includes a number of instructions that enable a computer
device (personal
computer, server, or network device) to execute the methods provided by the
embodiments. For
example, computerized instructions functional to enable computer systems to
perform functions
.. of the client subsystem, the CIS, and the distributed blockchain ledger may
be provided and
may be installed and operated one or more computers in order to enable
performance of the
systems and methods described herein.
[00147] The embodiments described herein are implemented by physical computer
hardware,
including computing devices, servers, receivers, transmitters, processors,
memory, displays,
and networks. The embodiments described herein provide useful physical
machines and
particularly configured computer hardware arrangements. For example, the
embodiments
described herein may be executed on a particularly configured single-purpose
custom computer
device.
[00148] Although the embodiments have been described in detail, it should be
understood that
various changes, substitutions and alterations can be made herein.
[00149] Moreover, the scope of the present application is not intended to be
limited to the
particular embodiments of the process, machine, manufacture, composition of
matter, means,
methods and steps described in the specification.
[00150] As can be understood, the examples described above and illustrated are
intended to
.. be exemplary only.
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