From elevated interest rates, aggressive regulatory oversight, and the threat of a looming global recession to the anticipated surge of non-performing loans, today’s banks face an environment fraught with obstacles.
Digital assets ― which encompass finance agreements such as consumer loans ― must contain specific legal and regulatory requirements to ensure their enforceability, as well as preserve the ability to sell or transfer the assets while still maintaining holder-in-due-course rights. By protecting a bank’s security interest and producing a chain of evidence and custody that is court-admissible, digital loans enable lenders to prove their interest and claim on the secured asset in the case of loan non-performance. It is essential that digital loan documents confer the same level of protection as paper contracts.
In this paper, we will outline the significant threats faced by today’s banking community; examine why digitization is necessary to reduce financial risks; and explore how compliance risks are alleviated through robust digital lending capabilities. Finally, we will reveal how digital asset certainty represents the foundation to ensure integrity, enforceability and authenticity across loans ― helping lenders reduce risk in all stages of loan management.
