"This in turn could unlock lower Professional Indemnity Insurance premiums, potentially by more than 15%, a significant saving for a sector struggling with recent PI insurance increases."
Stablecoins issued on the Coadjute Network will be the first UK retail bank stablecoins and the first in the world expressly designed to speed-up the completion of mortgages.
Chancellor Rishi Sunak recently named Central Bank Digital Currency (CBDC) on a list of priority financial reforms for the Treasury. This follows his set up earlier in the year of a fintech taskforce to investigate a Bank of England CDBC or ‘britcoin’, which would revolutionise the way money moves around the UK monetary system. Coadjute’s move brings the same technology to the process of home buying and selling.
The stablecoins are purpose-built for mortgage completions and transform the efficiency with which funds can be moved and settled between the parties involved in a property transaction, including mortgage lenders, conveyancers and estate agents.
Coadjute’s approach provides a ‘single source of truth’ simultaneously to all parties involved, removes the need for continuous manual reconciliation, and significantly cuts the risk of fraud. The use of mortgage stablecoins on the Coadjute Network also lowers costs by moving funds over the network and not solely through traditional payment rails.
For banks, they can better manage their liquidity positions and forecasts on mortgage inflows and outflows and reduce the potential for fraud from Authorised Push Payments (APP).
Coadjute estimates that due to lower fraud risks, Professional Indemnity Insurance premiums could potentially reduce by more than 15%.
During the completion process, funds are locked in bank accounts and mortgage stablecoins are then issued onto the blockchain ledger. Respective parties involved in the transaction can then request, exchange and track the stablecoins from within their existing software. Once agreed, the completion time can be programmed to take place at any time 24/7.
Coadjute will be running trials of the new Mortgage Stablecoin service in November with a number of UK mortgage lenders, along with providers of legal and banking software.
John Reynolds, COO of Coadjute, said: “The opportunity to reduce push payment fraud is particularly significant. We enable conveyancers to continue to manage transactions but without having to take on the risk of holding cash in client accounts. This in turn could unlock lower Professional Indemnity Insurance premiums, potentially by more than 15%, a significant saving for a sector struggling with recent PI insurance increases.”
Dan Salmons, CEO of Coadjute, commented: “Blockchain technology is no longer just about cryptocurrencies, and is now being applied to highly regulated environments such as Central Bank Digital Currencies. Coadjute’s mortgage stablecoin represents the ultimate in control, having been designed expressly and solely for the completion of mortgages.
“It is truly programmable money, with built-in rules that prevent it ever being used for anything other than the precise property transaction it was meant for. Our stablecoin will enable a much smoother process for property completions along with unprecedented security. It truly is a breakthrough in the property market.”
