China Everbright Bank (CEB) announced that it has launched a supply chain finance blockchain, according to Shanghai Securities News. The project uses the Ant Blockchain Duo Chain solution for supply chain. The “duo” refers to the intersection between supply chain and blockchain.
While CEB isn’t as large as the big four Chinese state owned banks, it’s nonetheless very substantial with total assets of $662 billion in June 2019. It’s partly owned by the state and ranked as 151 on the Forbes 2000 list of largest companies in 2019.
The report claims that CEB is the first Chinese bank to deploy the Duo Chain solution after it started to work with Ant Financial during the second half of 2019. Ant unveiled the technology solution last year and initially tested it with an automobile manufacturer.
As with all supply chain finance solutions, the starting point is the accounts payable owed by a large company to its suppliers. Given the bank has access to details and knows the invoices come from the larger creditworthy company, it’s more confident to lend to these smaller suppliers.
Otherwise, these SMEs might not qualify for trade credit because there’s a lack of verifiable information about their business. And even if the SME did qualify, outside of supply chain finance, it would be more expensive because the bank would perceive a higher risk, and it would require more work from the small business.
The CEB solution brings together several moving parts. It uses identity and authentication via CEB’s existing platforms. And other integrations involve internal and external data, credit reporting and bank account systems.
In the current epidemic, a key benefit is the solution is entirely online.
This isn’t CEB’s first foray into blockchain trade finance. Its a participant in an initiative from the China Banking Association. And its Hong Kong branch took part in a trial of the Contour Letter of Credit blockchain (formerly called Voltron).
