Part 2 – Asset Identity verification
Asset Finance - Rethink the asset register: Part 2
In part one of this series, we discussed creating one common standard to identify any asset, providing us with a common language to discuss assets—solving the issue of searching for and registering assets in an asset register.
The second part of the series will introduce how we can verify an asset identity. Thus, ensuring the information in the 3-part identifier matches an asset in the real world.
Verifying an asset identity can be easily confused with proving an asset’s existence, ownership or who is in current control. These concepts are discussed later. So what do we mean by asset identity verification? Asset identity verification confirms that the information used to create the identity is accurate and can correctly identify the asset in the real world. For the asset funder, this would be vital when confirming proof of title to an asset.
Verifying an Asset Identity
Verifying an asset identity can be carried out in two ways. First, using a central and trusted data source is the most simple and efficient way of verifying an asset identity. The second is by physically inspecting the asset and checking the details, such as serial numbers, make, and model, match your expectations.
Trusted data sources
In instances where a central trusted data source exists for a category of assets, either by type, manufacturer or other means, we can use the primary identifier from the asset identity to find the asset details. Thus, we can use this information to verify the legitimacy of the 3-part identifier discussed in part 1. An example of a central trusted data source is the DVLA. The DVLA is a government-run data source of vehicle information in the UK. Using a vehicle’s VIN, we can query info held by the DVLA to retrieve some primary details about the vehicle. Open Assets uses these data sources to create digitally verified asset identities.
Open Assets has developed ways to integrate with manufacturers and other trusted data sources to allow more and more asset identities to be automatically verified. Working with manufacturers is one of the efforts we are making to drive data quality for the asset finance industry. The more trusted data sources we onboard, the more we will improve the scope of which asset identities can be verified automatically for you.
Physical inspections
In other instances, verifying asset identities via trusted data sources isn’t always possible. This is often the case when assets are uncommon, the asset type has no governing association, or there are many manufacturers for a particular asset type. Historically, physical asset inspections have been the primary means to verify these asset details. No technology can beat seeing the asset for yourself; we are working with physical assets, after all. Inspections also provide other vital information such as condition, usage, locations and other intangibles.
At Open Assets, we believe replacing physical inspections would be a mistake. However, there is space for technology to improve the efficiency and effectiveness of physical inspections. Our Inspections product allows you to optimise inspections using factors like task scheduling and travel time between inspection locations. In addition, the information gathered from inspections can be automatically converted into actionable tasks for other team members to see in real-time. Plus, all inspections utilise the same centralised asset information via the Open Assets Asset Management product. Finally, all inspections can be created, viewed and edited from the office or on-site by anyone involved, reducing communication friction and eliminating information silos.
Suppose you use an external inspector to run an inspection. In that case, it is easy to see how there could be inconsistencies in communicating which assets need to be checked. As a result, there is less confusion, improved communication, fewer mistakes, and ultimately reduces, the cost of running a physical inspection. Of course, this also applies to organisations that run inspections by ensuring the same efficiencies between teams.
Customer lead inspections
The last option to verify an asset identity is to ask the asset’s controller, often your customer, to provide proof of the asset’s details. Customers can use mobile phones to conduct inspections, providing either videos or photos of the asset and any identifiers attached to it as proof.
This method of inspection has an increased risk. First, you must trust the person inspecting the asset to provide complete and objective evidence. Whether on purpose or by accident, inaccurate information can significantly affect the claim to asset title. However, we should ask the question, can technology overcome these issues?
The risks associated with customer lead inspections are:
Evidence that an asset in their control, not taken from somewhere else (online, for example)
Evidence is accurate
Evidence is sufficient and complete
We have the means to solve this issue with technology. For example, banks use similar technology to verify identification (driving licence, passport) when you create a bank account.
Open Assets is actively exploring the technology to allow customers to provide evidence while maintaining the trust and accuracy of the proof given. We’d love to hear your thoughts on where you see additional risks with this solution.
The asset register
Since 2019, the Arena Holdings fraud case has been the elephant in every room. The question posed by the industry and regulators like the PRA (Prudential Regulation Authority) is; can we create a system to mitigate it? Most readers have probably had this question in mind while reading.
The answer is: YES. Open Assets can solve Arena.
The solution is simple. Verify that the 3 parts of an asset identity match a real asset. This simple concept would have prevented Arena Holdings from gaining finance on assets that did not exist. This is not a new concept, but you now have the process to manage it.
We have implemented this via a 'verified' mark on an asset identity to facilitate this. As shown above, we can automate marking some assets via trusted data sources. When inspections are required, you can mark an asset identity as verified and add evidence if you'd like. This solution allows you to maintain a list of verified and unverified asset identities, all based on your risk appetite.
We understand that gaining 100% coverage is not feasible as it stands. However, Open Assets continues to expand on automated ways to verify asset identities. Ultimately, the principle is sound and will only improve with time.
Conclusion
A verified asset identity has many benefits, including reducing risk through data quality and verification processes. We have several options to verify an asset identity, from automated methods using data from trusted sources to physically checking the asset. Both of which have their own risk, costs and benefits.
Verifying asset identities is the ultimate solution to the issues raised by the recent Arena Holdings case. By verifying asset identities, we can be sure the asset truly exists and is eligible for funding. As shown in this article, we have created the framework to manage the verification and empower you to lower your risk. At Open Assets, we are committed to verifying every asset registered with us by providing more and more ways to automate the verification process. See Open Assets Inspection for more information on we help you improve your inspection processes as a first step.
In the next article of this series, we will discuss the ‘financed asset’ and how complex assets can expose funders to additional risk with high-value attachments and components.
If you want to learn more about Open Assets Inspection, don’t hesitate to contact us at hello@open-assets.co.uk. It would be great to hear from you.
All parts of this series:
Asset Identity - a common way to represent any asset digitally
You are here → Asset Identity Verification - confirming the identity matches the real-world asset
The Financed Asset - the combination of asset identities and additional data that create a complete picture of an asset
Open Assets Register - a database of assets and the parties with a financial interest in them