The economic crisis led the industry to operate with barely half of its installed capacity. The demand for goods and services plummeted, companies do not make cash, work capital was resented, the payment chain was stretched and all this is reflected in a rather disturbing fact: that triggered by the number of checks rejected.
The level "bounces" increased a whopping 66% in 2018 and the magnitude of the figure is only comparable with those of the fateful 2001. With these data on the table, from Ficonomics warn: "In recent months there was growing concern about the credit status of people and companies. "
His report describes the current situation as "alarming" and stresses that the level of rejected checks is above what was observed in the 2001 crisis.
Given this scenario, appeals to different alternatives so as not to be "hooked" with uncollectible value. And this is where a word that is currently little known comes into play but one that will gain prominence: the blockchain. Or, rather, the benefits of this system, which gives more transparency to operations (see infographic).
Beyond the financial sector, the blockchain system (or block chain) is increasingly used by a variety of sectors. For example, the retail sector, and especially supermarkets, which "follow" their products from the field to the gondola.
If the super follow-up works perfectly, why not implement it in the checks?
The road is the same: monitor as if it were a GPS each of the steps that each of the values paid to pay: who gave life, what is the profile of the issuer and in which hands it was. And with an extra seasoning: avoid fraud thanks to the basic principle of transparency.A GPS for checks
The company Pagos Futuros decided to immerse itself in the wave of innovation and develop, together with the VR4 technology, a checkbook solution based on the blockchain system.What they are looking for is to eliminate logistical, administrative costs and fraud risks. Also, improve the collectability and expand financing, even when the parties do not know each other.
In addition, it is a multi-bank solution, since the funds revolve between customers of different entities and even allows the participation of users who are outside the financial system.
"Our goal is to innovate, be disruptive from the technological point of view, but preserving functionally the characteristics, uses and customs that the Argentine commercial financing market has among companies today", assured Adrián Mazza, IT Manager of Future Payments, to iProUP.
Like many great ideas, this development was born from a need. The companies, medium and small, constantly face problems in the payment chain and saw the vein to transform those inconveniences into an opportunity.
The conflict? There was a flow of collections and a commercial turn that the banks were not visualizing, although solving this point is not an easy task.
When moving from the paper to the digital world, those responsible must ensure three central issues: identity of the signer, inalterability of the assumed commitment and uniqueness of the document.
"Blockchain solves this, creating an 'electronic file' throughout the history of each payment and ensuring that nobody, neither customers, nor banks, nor us, can create payments from a third party or give the same check to two different people." , adds Mazza.
The benefits are in sight.
- First, the impact is logistical and administrative. With this platform you can send a payment to the beneficiary in seconds and from the moment you accept it you can split it and transfer it to a third party, discount a part to finance yourself or direct it to another own account. It is a leap similar to that represented by the email to traditional mail.
- In second order, issuers and beneficiaries are no longer required to use their current account: the platform supports all types of accounts and wallets for accreditation and payment via CBU, for traditional banking, or CVU, for digital banking.
- Third, in case of lack of funds, the platform ensures the partial collection of the available for the subsequent negotiation or judicialization only of the remainder owed.
"Let's think that today a check is rejected even if 99% of the funds are available," explains the IT manager.
Among the advantages offered by this tool is the possibility of "splitting" checks (such as digital currencies), having a scoring of real-time behavior of issuers, including guarantors in smart contracts, eliminating administrative processes, possible human errors and seeing dates of collection and expiration, among other functionalities.Blockchain, the basic technology
To carry out this development, Pagos Futuros relied on the technology company VR4. In a world where this technology promises to be "the next Internet", due to the influence it will have in different sectors, the main protocol chosen was Hyperledger Fabric, an open source framework that basically allows the implementation of private blockchains instead of public ones.This innovation, which was not the only one chosen in this project, has been promoted for three years by a conglomerate of large organizations and technology companies such as IBM, Linux Foundation and Cisco.
"This is a complex and unprecedented implementation in Argentina, and it is a product designed according to AA accessibility standards (for all)", adds Joaquín Paz Marchese, Chief Business Development Officer (CBDO) of VR4, in dialogue with iProUP.
This development, which at times seems like science fiction, has its great challenges. Especially when working with such a new technology in which "there are always risks" and that requires companies to take the "role of evangelization".
Strictly speaking, the blockchain allows:
- Implementation of smart contracts
- Traceability
- Transparency
- Security
- Reduction of logistic costs
- Elimination of paper
"We still have to work to make sure that the information does not have to be in a single place, with blockchain distributed in private and secure nodes, and there is an important traceability backwards, since contracts can not be manipulated because there is transparency in all the steps ", adds to iProUP Leonardo Ferrero, Chief Technology Office (CTO), of VR4.But an industry as old (and as sensitive) as the financial industry is usually not very flexible with the arrival of innovative technologies. He even interprets these solutions as a possible enemy of his business. "
"However, some already think with their innovation centers with these technologies, it is only a matter of time before they become massive in the implementations, the fintech begin to steal market and the banks have to change, because historically they have a model that works" explains Paz Marchesese.
The interesting thing is that this platform is not only designed for banks, but with the same Application Programming Interface (API), different management companies can issue collections. This facilitates the process and simplifies the route of money that traditional entities already have.
"The relationship between the parties is streamlined, frictions decrease both when circulating payments and in the absence of funds." It is a flexible solution that adapts to the economic reality of Argentine companies and allows them to finance themselves, even at a 0, with suppliers that today have no way to qualify them or do not accept deferred payments, "adds Mazza.
In this regard, he points out that "the financial world also has much to gain, offering credit and even guarantees to all the players in the payment chain that today".More resources
The problem of "flying checks" is not new: in Argentina it is very common for the values of third parties to pass from one company to another and, if rejected, trigger an imbalance in the entire chain of payments that translates into losses, both of time and money.Although today there are some tools to consult the situation of several firms, credit reports are complex, unnecessarily long and, often, unworkable for SMEs.
From the need of small companies was born Checks, a mobile platform that allows to instantly check the status of the issuer in just three seconds and from the phone.
"We started to see that the companies did not have any procedure to verify this information, it was done when the checks arrived at the office and it was too late," explains Lett-Brown, co-founder of the tool, to iProUP.
"I prefer to have debts before rejected checks" was the phrase that triggered the creation of this startup. With its partners Martin Glascher and Manuel Astesiano Agote, Lett-Brown developed this tool that contributes to providing greater predictability.Using the service is simple. You just have to download the app (available for iOS and Android), and enter a phone and mail to verify the account.
After accepting the terms and conditions, the system offers 20 free consultations to prove its usefulness. How does it work? You just have to take a picture of the check and the application will verify the public status of the issuer in the public records, all at once.
After the limit of free consultations, the app is blocked and asks if you want to have advice from an executive to know the different payment plans.
Currently, the company offers three monthly installments, in addition to customized corporate plans.
With awareness of the problems presented by this collection segment, the founders knew that they had to generate an easy-to-use and agile app to respond. "If you know how to use WhatsApp, you can use this tool without problems," says Lett-Brown.Both the implementation of blockchain of future payments, and the app of Checks are some of the tools that add to the market to improve management and step on the accelerator in terms of innovation within the financial industry.