Mortgages

PBF CEO, Morgan McKenney on blockchain, DeFi & tokenization


As the CEO of the Provenance Blockchain Foundation, Morgan McKenney, leads the expansion of the Provenance Blockchain ecosystem to enable financial institutions globally to realise the benefits of blockchain.

She joined the foundation in March of 2022 from her prior role at Citi, where she held a number of key, senior operating roles, the most recent of which was CEO for Citi’s largest division, Global Consumer Banking.  

McKenney’s career at Citi saw her primarily focused on institutional and consumer payments innovation and digital transformation in Asia, Europe, Middle East and Africa, and North America.

As blockchain practitioner, she is passionate about enabling the digital economy, harnessing emerging technology for business value and democratising access to financial services to support economic growth. 

We caught up with her to find out more.

Tell us about the Provenance Blockchain Foundation and its core purpose

Provenance Blockchain is purpose built to transform financial services, by enabling institutions and fintechs to seamlessly and securely issue, transact, and service the end-to-end lifecycle of a financial asset in a digital-native format, at scale on a public blockchain.

Provenance Blockchain was built in 2018, and today is the leading public blockchain for financial services. The blockchain has supported over $12B in transactions, and is actively leveraged by over 60 financial institutions, including Apollo, Hamilton Lane, Guaranteed Rate, Figure, Movement Mortgage and others. 

Provenance Blockchain has enabled several firsts for the financial services industry, including:

  • First to enable a lender to originate loans on-chain
  • First to tokenize an asset-backed securitization on-chain
  • First to enable a mortgage REIT on-chain
  • First to execute a mortgage transaction to transfer ownership on-chain
  • First to enable a securitization of a bundle of HELOCs entirely on-chain
  • First to issue a digitally-native 1940 Act registered fund on-chain

What differentiates it from other blockchain operators?

Unlike many other public blockchains that are built to be used across various industries, Provenance Blockchain is purpose-built for financial services.  What that means is that Provenance Blockchain provides natively built on-chain features and tooling that is required by regulated financial institutions and fintechs.  Provenance Blockchain ensures data control so that no personally identifiable information is placed onto the blockchain, which is critical to support financial transactions and to support regulatory standards. What is placed on-chain is a unique digital fingerprint that requires access to private keys to read the underlying private data. 

Authorised parties like counterparties, auditors and regulators can be granted access to the private key to access the private information.

We hear a lot about the private vs public blockchain. Which space looks most promising for traditional asset tokenization – and why?

Provenance Blockchain is proudly public. This means we benefit from an open innovation platform to enable rapid innovation and diverse participation by developers and users, while requiring governance votes by our community for any software and smart contract changes. 

It is our view that public chains will ultimately be the platform of choice for traditional financial assets given the differentiated capability to support open access by users, open engagement for developers for open innovation, with continued advancements in privacy features.  As we transition to the future, there will be certain private and permissioned environments required for regulatory feasibility, particularly in the space of digital money and bank minted tokenized deposits. 

Regulated financial institutions are already actively participating on Provenance Blockchain today, particularly in the space of private assets and lending, ensuring they comply with their existing regulatory frameworks while leveraging blockchain as the infrastructure to create incremental value for their business and their customers.

What benefits are there to be had from tokenizing real estate and mortgages? And, how do you do it?

The benefits are many, for example, Placing mortgages on blockchain technology reduces the time it takes, from application to issuance, from 45 days to five days. That reduction in time and processing saves over 100 bps across the entire mortgage lifecycle from origination, servicing, financing, and securitization, which means the originator can offer the consumer a lower interest rate while also increasing the net margin of the mortgage originator.  

For home equity lines of credit, it is now possible to submit an application and receive approval in 5 minutes, and to receive funding in the bank account in as few as five days, significantly reducing the time and expense.  Blockchain reduces the costs of HELOCs by $200-$300 and makes the loan easier to distribute to other loan buyers by fully digitizing the credit file.

A solution named DART, Digital Asset Registry Technologies, runs on Provenance Blockchain and offers a secure and streamlined mortgage loan registry to help owners of loans perfect their collateral.  The solution works in place of the more-costly and less efficient MERS.  With DART, lenders can reduce the amount of time they hold a new asset on their books from 100 days to two days, before securitizing and selling the asset, which more quickly frees a significant amount of credit for new loan applications.

We’re in a crypto winter. What implications does that have for the growing NFT marketplace?

We’re focused on digitally native real-world financial assets, and NFTs have a practical use case in real-world financial assets, such as a house.  NFTs create the ability to uniquely identify an asset, to create a non-tamperable record of relevant and associated data, to provide a mechanism for the asset to be exchanged, and to transparent record ownership.  These practical use cases leveraging blockchain technology capabilities enable material value for business and consumers, and the adoption of these use cases are not tied to the speculative nature of cryptocurrency.

FTX has knocked market confidence. How can better trust be established within the digital asset and crypto space?

Crypto needs a new narrative.  We need to move from the current focus on speculative trading and lending of tokens and shift our focus to creating real business value with blockchain and decentralized networks.  

Real business value on public decentralized blockchain is happening now.  In 2022, specific financial service sectors have made notable strides in adoption of their core businesses, expanding their participation in blockchain technology beyond prototypes to a number of real world financial assets issued and managed in a digitally native format.  For example, Provenance Blockchain saw major institutional firms, such as Apollo and Hamilton Lane launch digitally-native funds on-chain. Hamilton Lane introduced the first digitally-native 1940 Act Registered fund, leveraging Figure Digital Fund Services and Provenance Blockchain. On the lending side, leading U.S. based lenders Homepoint and Movement Mortgage are beginning to leverage Provenance Blockchain and Figure’s white-label HELOC solution to originate HELOCs leveraging blockchain technology.

Looking forward to 2023/4, what are your marketplace predictions?

Coming out of 2022, it’s clearer why the path forward is a decentralized one. Looking forward to 2023, the adoption curve of real world assets issued natively on-chain will accelerate on decentralized infrastructure.  

We expect further scaling across lending and private assets, with additional new high friction asset classes going live on chain, including infrastructure lending, receivables and distressed assets for increased liquidity, accessibility and operational efficiency. 

Finally and very importantly, we believe that there will be greater regulatory clarity around stablecoins, enabling banks to natively issue tokenized bank deposits on blockchain, which will be a further catalyst for regulated financial services activities to successfully move on blockchain.



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