News


  • Stated owned banks teamed up with five banks to develop blockchain platforms
  • 2018.12.05
  • Stated owned banks established a trade finance blockchain platform in Shenzhen, Hong Kong and Macau.
    Recently, the “Guangdong, Hong Kong and Macao bay area Trade Finance Blockchain Platform” has been officially put into trial operation in Shenzhen. The platform is dedicated to building an open financial and trade ecosystem for Guangdong, Hong Kong and Macau Bay Area, and further expand its operation to the world.
    At present, the first phase of the Bay Area Trade Finance Blockchain Platform is under trial-operation to provide supply chain financing based on accounts receivable.
    After interviewing several banks participating in the project , reporter from 21st Century Business Herald learned that the blockchain platform will be in the “9 2” urban agglomeration of Guangdong, Hong Kong and Macau. 9 refers to support 9 cities in mainland as the breakthrough for banks’ supporting on the real economy to solve the problem of financing difficulties for SME financing. 2 refers to Macau and Hong Kong, since under the current capital control, cross-border payment and settlement is still inconvenient. It is vital to explore the measures and method of opening capital projects.
    Wang Jing, director of BYD's fund management center, said that BYD's suppliers are mainly small and medium-sized enterprises, with only 10,000 to 20,000 first-tier suppliers, and second- and third-tier suppliers are even larger. The difficulty of the actual financing of suppliers is that the first-tier suppliers have relatively strong financial strength and are not in short of funding sources. However, the second- and third-tier suppliers often require large capital, and it is not convenient to finance from banks. Second, on the basis of the three-month supply chain period, it is relatively simple for those core suppliers to do liquidity discounting. Due to the scattered distribution of suppliers, the discounted transactions are facing certain difficulty. Thirdly, if the company lacks valid vouchers to discount the bank within the accounting period, it is difficult to achieve financing needs.
    From the operational results, the blockchain platform is expected to reduce the financing costs of enterprises. It will take only about 20 minutes to finance through blockchain.

    Central bank set up financial technology company
    The Bay Area Trade Finance Blockchain Platform is jointly promoted, coordinated and organized by the Central Bank Digital Currency Research Institute and the Central Bank’s Shenzhen Central Branch. The Shenzhen Institute of Financial Science and Technology is a joint venture with Bank of China, China Construction Bank, China Merchants Bank, Ping An Bank, Standard Chartered Bank and BYD with nearly two months’ closed development.
    At present, the first phase of the Bay Area Trade Finance Blockchain Platform Project has been deployed online and entered the trial operation phase. In the first phase, a trade finance underlying platform has been built based on blockchain technology.  Trade and financing activities including various scenarios such as trade receivable financing were available on the platform is functional. At the same time, the platform provides a regulatory system for trade finance to achieve dynamic and real-time monitoring of various financial activities on the platform.
    Wu Naishen, General Manager of Standard Chartered China South China and President of Shenzhen Branch, said that the Bay Area Trade Finance Blockchain Platform will help to enhance various scenarios including trade and payment (including cross-border payment), and it is expected to become a widely recognized international platform. Besides, Standard Chartered will utilize its international network advantage to promote this platform.
    Earlier, the 21st Century Business Herald reported on September 5 that Digital Money Research Institute of People's Bank of China has established "Shenzhen Financial Technology Co., Ltd." in Shenzhen. The company is involved in the development of projects such as the trade finance blockchain. According to industry and commerce information, the company was established on June 15 this year, with a registered capital of 2 million Yuan.
    In addition, the China Banknote Printing and Minting Corporation, which is affiliated to the Central Bank, has established the Hangzhou Blockchain Technology Research Institute in Hangzhou through the subsidiary China Banknote Credit Card Industry Development Co., Ltd., and has released blockchain solutions and products such as block registration and open platform and the China Banknote Financial Block.  

    Empowering Bay Area Supply Chain Financing
    The Bay Area Trade Finance Blockchain Platform is developed by five banks and BYD, which aims to achieve supply chain financing for core enterprises through accounts receivable funding.
    The difficulty in financing SMEs lies in the following: Firstly, the scale of enterprises is small and the profit is relatively low. Secondly, the development of small and micro enterprises is not very standardized in terms of financial treatment. For financial institutions, the credit of small and micro enterprises’ lacks data so that the credibility is low. Therefore, it cost too high for banks go to small and micro financing individually. 
    “Through the blockchain trade finance platform, it is actually equivalent to make a factoring financing for suppliers online.” Said Wang Jing.
    “Banks operate small and medium-sized enterprises, most of which are based on supply chain to achieve mass customer acquisition. Verification of the authenticity of trade background is an important part of business compliance,” said Hou Weirong, general manager of China Merchants Bank’s transaction banking department. “The information between banks is Isolated, and data is the most important asset in the Internet era. To solve the problem of risk control, especially when it comes to receivables deduction and if there is a problem in the supply chain, the bank has no real-time information and can only rely on financial technology.”
    Wu Naijun said that the audit of the authenticity of the trade background is one of the main difficulties in the traditional trade finance business. For example, a company may use the same accounts receivable as a guarantee to maliciously obtain multiple loans from different financial institutions. In the financial system, due to the limitations of various banks in information sharing, the above-mentioned malicious financing behavior cannot be fundamentally eliminated. The advantage of the blockchain is that the transaction information is transparent and unchangeable. When a company obtains financing from a bank with a trade, the transaction is recorded on the blockchain platform, and it is impossible to finance from another bank with the same trade.   
    Through this platform, The process of trade finance has been shortened. Li Shuang, deputy general manager of the Trade Finance Department of the Bank of China Shenzhen Branch, said that on the trade finance blockchain platform, the supplier's accounts receivable financing can use the core enterprise credit to solve the problem of insufficient supplier quota. Hou Weirong said that on the basis of sharing, banks can realize the right to determine the background of transactions. The trade finance that was completed for ten days in the past will only cost only 20 minutes fastest with the completed documentation.
    The second is to reduce the financing interest rate. Xu Honghui, vice president of Ping An Bank's transaction banking division, said that the trade finance costs of small and medium-sized enterprises have been 7%-8%, and the price of the trade finance blockchain may fall below 6%.

    Achieve more scenarios such as cross-border transcation
    For the future of the Bay Area Trade Finance Blockchain Platform, the first is to access more core enterprises and introduce corporate credit data.
    Xu Honghui said that in the future, more core enterprises and data resources will be accessed, including the introduction of third-party assessments, business data  and judicial department data. The more data there is, the safer the chain will be.
    Hou Weirong said that in the future, if the trade finance blockchain platform is connected to government supervision and logistics information systems such as Zhongdeng.com, taxation, etc., the participants can share information more easily. Problems of SMEs such as Information asymmetry , low credit rating and insufficient credit, will be solved implement a risk-based rating though platform.  
    Second, on the basis of the first phase of supply chain finance, more scenarios will be introduced, including cross-border payment, liquidation, and opening of domestic and overseas information.
    “Banks actually have no idea of the export orders are true or not.” Hou Weirong said that the cross-border current account has been fully liberalized, and the capitalization needs new tools to interconnect with similar platforms overseas. We will share the data among the entire Guangdong, Hong Kong and Macau Bay Area and docked with the platform of the trade finance block developed by the Hong Kong Monetary Authority.
    Xu Honghui mentioned that the first phase of the project will only serve domestic trade in the Bay Area and in the future, they will introduce bank's existing products, including domestic and foreign trade, financing and settlement. “In the future, the blockchain will help improve our trading.”
    Li Shuang said that on the basis of the first phase of supply chain finance, in the future, it is possible to explore financing on assets such as letters of credit and letters of guarantee, so as to open up domestic and foreign markets to serve small and medium-sized enterprises in batches.
    As an innovation, financing based on blockchain technology still requires corresponding regulatory support and a clear scope.
    Hou Weirong, the platform needs to use electronic seals and other applications. At present, many details of online signing are vague, while foreign countries such as the United States have laws that stipulate the legal status of electronic seals.
    Xu Honghui said that the blockchain is a new technology and how to support banks and other financial institutions with regulations and policies is still unclear, and there is currently no set of supervision, which needs further clarification in the future.

  • Stated owned banks teamed up with five banks to develop blockchain platforms
  • 2018.12.05
  • Stated owned banks established a trade finance blockchain platform in Shenzhen, Hong Kong and Macau.
    Recently, the “Guangdong, Hong Kong and Macao bay area Trade Finance Blockchain Platform” has been officially put into trial operation in Shenzhen. The platform is dedicated to building an open financial and trade ecosystem for Guangdong, Hong Kong and Macau Bay Area, and further expand its operation to the world.
    At present, the first phase of the Bay Area Trade Finance Blockchain Platform is under trial-operation to provide supply chain financing based on accounts receivable.
    After interviewing several banks participating in the project , reporter from 21st Century Business Herald learned that the blockchain platform will be in the “9 2” urban agglomeration of Guangdong, Hong Kong and Macau. 9 refers to support 9 cities in mainland as the breakthrough for banks’ supporting on the real economy to solve the problem of financing difficulties for SME financing. 2 refers to Macau and Hong Kong, since under the current capital control, cross-border payment and settlement is still inconvenient. It is vital to explore the measures and method of opening capital projects.
    Wang Jing, director of BYD's fund management center, said that BYD's suppliers are mainly small and medium-sized enterprises, with only 10,000 to 20,000 first-tier suppliers, and second- and third-tier suppliers are even larger. The difficulty of the actual financing of suppliers is that the first-tier suppliers have relatively strong financial strength and are not in short of funding sources. However, the second- and third-tier suppliers often require large capital, and it is not convenient to finance from banks. Second, on the basis of the three-month supply chain period, it is relatively simple for those core suppliers to do liquidity discounting. Due to the scattered distribution of suppliers, the discounted transactions are facing certain difficulty. Thirdly, if the company lacks valid vouchers to discount the bank within the accounting period, it is difficult to achieve financing needs.
    From the operational results, the blockchain platform is expected to reduce the financing costs of enterprises. It will take only about 20 minutes to finance through blockchain.

    Central bank set up financial technology company
    The Bay Area Trade Finance Blockchain Platform is jointly promoted, coordinated and organized by the Central Bank Digital Currency Research Institute and the Central Bank’s Shenzhen Central Branch. The Shenzhen Institute of Financial Science and Technology is a joint venture with Bank of China, China Construction Bank, China Merchants Bank, Ping An Bank, Standard Chartered Bank and BYD with nearly two months’ closed development.
    At present, the first phase of the Bay Area Trade Finance Blockchain Platform Project has been deployed online and entered the trial operation phase. In the first phase, a trade finance underlying platform has been built based on blockchain technology.  Trade and financing activities including various scenarios such as trade receivable financing were available on the platform is functional. At the same time, the platform provides a regulatory system for trade finance to achieve dynamic and real-time monitoring of various financial activities on the platform.
    Wu Naishen, General Manager of Standard Chartered China South China and President of Shenzhen Branch, said that the Bay Area Trade Finance Blockchain Platform will help to enhance various scenarios including trade and payment (including cross-border payment), and it is expected to become a widely recognized international platform. Besides, Standard Chartered will utilize its international network advantage to promote this platform.
    Earlier, the 21st Century Business Herald reported on September 5 that Digital Money Research Institute of People's Bank of China has established "Shenzhen Financial Technology Co., Ltd." in Shenzhen. The company is involved in the development of projects such as the trade finance blockchain. According to industry and commerce information, the company was established on June 15 this year, with a registered capital of 2 million Yuan.
    In addition, the China Banknote Printing and Minting Corporation, which is affiliated to the Central Bank, has established the Hangzhou Blockchain Technology Research Institute in Hangzhou through the subsidiary China Banknote Credit Card Industry Development Co., Ltd., and has released blockchain solutions and products such as block registration and open platform and the China Banknote Financial Block.  

    Empowering Bay Area Supply Chain Financing
    The Bay Area Trade Finance Blockchain Platform is developed by five banks and BYD, which aims to achieve supply chain financing for core enterprises through accounts receivable funding.
    The difficulty in financing SMEs lies in the following: Firstly, the scale of enterprises is small and the profit is relatively low. Secondly, the development of small and micro enterprises is not very standardized in terms of financial treatment. For financial institutions, the credit of small and micro enterprises’ lacks data so that the credibility is low. Therefore, it cost too high for banks go to small and micro financing individually. 
    “Through the blockchain trade finance platform, it is actually equivalent to make a factoring financing for suppliers online.” Said Wang Jing.
    “Banks operate small and medium-sized enterprises, most of which are based on supply chain to achieve mass customer acquisition. Verification of the authenticity of trade background is an important part of business compliance,” said Hou Weirong, general manager of China Merchants Bank’s transaction banking department. “The information between banks is Isolated, and data is the most important asset in the Internet era. To solve the problem of risk control, especially when it comes to receivables deduction and if there is a problem in the supply chain, the bank has no real-time information and can only rely on financial technology.”
    Wu Naijun said that the audit of the authenticity of the trade background is one of the main difficulties in the traditional trade finance business. For example, a company may use the same accounts receivable as a guarantee to maliciously obtain multiple loans from different financial institutions. In the financial system, due to the limitations of various banks in information sharing, the above-mentioned malicious financing behavior cannot be fundamentally eliminated. The advantage of the blockchain is that the transaction information is transparent and unchangeable. When a company obtains financing from a bank with a trade, the transaction is recorded on the blockchain platform, and it is impossible to finance from another bank with the same trade.   
    Through this platform, The process of trade finance has been shortened. Li Shuang, deputy general manager of the Trade Finance Department of the Bank of China Shenzhen Branch, said that on the trade finance blockchain platform, the supplier's accounts receivable financing can use the core enterprise credit to solve the problem of insufficient supplier quota. Hou Weirong said that on the basis of sharing, banks can realize the right to determine the background of transactions. The trade finance that was completed for ten days in the past will only cost only 20 minutes fastest with the completed documentation.
    The second is to reduce the financing interest rate. Xu Honghui, vice president of Ping An Bank's transaction banking division, said that the trade finance costs of small and medium-sized enterprises have been 7%-8%, and the price of the trade finance blockchain may fall below 6%.

    Achieve more scenarios such as cross-border transcation
    For the future of the Bay Area Trade Finance Blockchain Platform, the first is to access more core enterprises and introduce corporate credit data.
    Xu Honghui said that in the future, more core enterprises and data resources will be accessed, including the introduction of third-party assessments, business data  and judicial department data. The more data there is, the safer the chain will be.
    Hou Weirong said that in the future, if the trade finance blockchain platform is connected to government supervision and logistics information systems such as Zhongdeng.com, taxation, etc., the participants can share information more easily. Problems of SMEs such as Information asymmetry , low credit rating and insufficient credit, will be solved implement a risk-based rating though platform.  
    Second, on the basis of the first phase of supply chain finance, more scenarios will be introduced, including cross-border payment, liquidation, and opening of domestic and overseas information.
    “Banks actually have no idea of the export orders are true or not.” Hou Weirong said that the cross-border current account has been fully liberalized, and the capitalization needs new tools to interconnect with similar platforms overseas. We will share the data among the entire Guangdong, Hong Kong and Macau Bay Area and docked with the platform of the trade finance block developed by the Hong Kong Monetary Authority.
    Xu Honghui mentioned that the first phase of the project will only serve domestic trade in the Bay Area and in the future, they will introduce bank's existing products, including domestic and foreign trade, financing and settlement. “In the future, the blockchain will help improve our trading.”
    Li Shuang said that on the basis of the first phase of supply chain finance, in the future, it is possible to explore financing on assets such as letters of credit and letters of guarantee, so as to open up domestic and foreign markets to serve small and medium-sized enterprises in batches.
    As an innovation, financing based on blockchain technology still requires corresponding regulatory support and a clear scope.
    Hou Weirong, the platform needs to use electronic seals and other applications. At present, many details of online signing are vague, while foreign countries such as the United States have laws that stipulate the legal status of electronic seals.
    Xu Honghui said that the blockchain is a new technology and how to support banks and other financial institutions with regulations and policies is still unclear, and there is currently no set of supervision, which needs further clarification in the future.