Author: Mu Changchun, China People's Bank Payment and Settlement Department Deputy Director; deputy director Di Gang, People's Bank of China Digital Monetary Institute
In recent years, the rapid development of supply chain finance, the combination of industry and finance, and highlighting the reduction in the overall operating cost of the supply chain have become a new field for domestic enterprises and financial institutions to compete for innovation. However, the current domestic supply chain finance is still in its early stages. Although emerging technologies such as the Internet of Things and big data are emerging and applied, they are far away from maturity. Supply chain finance is still unable to break away from credit, and high-quality core enterprise credit cannot supply to The transmission of upstream and downstream chains, the credit system of SMEs is not perfect, and the problem of difficulty in financing and expensive financing still exists.
The core of credit is to prove the facts of the past and to predict the future. Blockchain technology is the best tool to carry credit. With the advent of Bitcoin, it has entered the public's field of vision and has attracted widespread attention. This article attempts to summarize the overview and development status of supply chain finance, analyzes the pain points of supply chain finance and blockchain solutions, and focuses on the exploration of the People's Bank of China trade finance blockchain platform in the field of supply chain finance. On the basis of the financial problems of blockchain + supply chain, the future is prospected.
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Supply Chain Finance Overview and Development Status
1. The concept and connotation of supply chain finance
On the micro level of enterprises, despite the continuous deepening of research on supply chain management, in the operation of landing, the focus of domestic enterprises on the supply chain is to achieve the effective integration of capital flow and logistics, information flow and business flow, which is also necessary for the development of supply chain. Overcoming obstacles.
Industrially, the combination of industry and finance is already a model advocated by the global advanced supply chain system and system. On the one hand, the globalization trend of international trade requires financial markets to provide a more flexible, lower cost, more efficient, and risk-controllable financing model centered on the supply chain; on the other hand, SMEs in the supply chain generally face funding The problem of shortage urgently needs the support of supply chain finance; accordingly, the development of commercial banks needs financial innovation to create new business growth points and profit sources.
Under the joint action of enterprise micro and industry macro, supply chain finance has become a new direction of supply chain management and financial theory innovation, and it has also developed rapidly in recent years.
The general domestic view on the definition of supply chain finance believes that supply chain finance refers to “relying on core customers and taking the real trade background as the premise, using self-compensated trade financing methods, through pledge registration of accounts receivable, third-party supervision, etc. Professional means to close capital flow or control property rights, and provide comprehensive financial products and services to upstream and downstream enterprises in the supply chain. "
Supply chain finance is a management behavior and process that integrates logistics operations, business operations and financial management. It closely connects buyers, sellers, third-party logistics and financial institutions in trade to realize the use of supply chain. Logistics revitalizes funds and at the same time uses funds to drive the role of supply chain logistics. In this process, how financial institutions can be more effectively embedded in the supply chain network, combined with supply chain operating enterprises, to achieve effective supply chain capital operation, and at the same time can reasonably control risks, has become a key issue in supply chain finance.
a) Supply chain management is the basis of supply chain financial services. The actual supply chain supports the development of supply chain finance. The scale and risks of supply chain finance are directly determined by the quality and stability of supply chain operations.
b) The use of big data to conduct an overall assessment of client companies is a prerequisite for supply chain financial services. The overall evaluation refers to the supply chain financial service providers systematically analyzing and evaluating customer companies from three perspectives: industry, supply chain and the enterprise itself, and deciding whether to provide supply chain financial services based on the analysis results.
c) The closed operation of funds is a rigid requirement for supply chain financial services. In order to ensure the normal operation of supply chain financial services, the capital flow and logistics operation of the supply chain must flow in accordance with the contract requirements.
d) Building a supply chain financial ecosystem is a necessary means of supply chain finance. The supply chain finance ecosystem is composed of supply chain financial beneficiaries, implementation entities, funding parties, and related companies and organizations of basic services.
e) Enterprises, channels and supply chains, especially potential small and medium-sized enterprises are the main targets of supply chain financial services.
f) Poorly liquid assets are the target of supply chain financial services. In the process of production and trade, enterprises have formed a large number of capital deposits such as accounts receivable, inventory, and prepayment. These poorly liquid assets provide ideal business resources for financial institutions or other service providers to develop supply chain financial services.
2. Supply chain financial transaction patterns
There are three types of traditional supply finance transaction forms: accounts receivable financing, inventory financing, and prepayment financing. In the development process of supply chain finance, a new form of transaction, strategic relationship financing, has also emerged. The following is a brief introduction to the four trading patterns.
(1) Accounts receivable financing
Accounts receivable financing, also known as invoice financing, refers to the transfer of accounts receivable formed by credit sales to a special financing institution, using accounts receivable as a source of repayment, so that the enterprise can obtain the required funds and strengthen the funds. turnover.
Accounts receivable financing is a comprehensive financial service integrating financing, settlement, financial management and risk guarantee. The main methods of account receivable financing are: factoring, factoring pool financing, reverse factoring, bill pool credit, export receivables pool financing and trade financing under export credit insurance.
(2) Inventory financing
Inventory financing, also known as inventory financing, refers to an enterprise that needs financing, uses its own inventory as collateral, pledges to the fund provider, and at the same time transfers the pledged inventory to a logistics enterprise that has the legal custody of inventory for custody to obtain credit The loan financing business is a movable property pledge business with the participation of logistics companies. The main forms of inventory financing are: static pledge credit, dynamic pledge credit and warehouse receipt pledge credit.
(3) Advance payment financing
Advance payment financing refers to the credit guarantee provided by a third-party logistics enterprise under the premise of the upstream company's commitment to repurchase. In order to alleviate the pressure of prepayment, small and medium-sized enterprises apply for pledged loans to banks and other financial institutions with established warehouse receipts designated by financial institutions. Financing business controlled by financial institutions with the right to take delivery of goods.
The main types of prepayment financing are: first-invoice / after-payment credit, secured delivery (confirmation warehouse) credit, future cargo rights pledge credit under the import letter of credit, domestic letter of credit, and commercial acceptance bills with guarantee letters.
(4) Strategic relationship financing
The three financing methods described above all belong to the financing behavior under the premise of collateral and are similar to the original corporate financing methods. In the supply chain, there is also financing based on strategic partnership and trust based on long-term cooperation, that is, strategic relationship financing. The characteristic of this financing method is that it requires the supply and demand side of funds to trust each other very much. In strategic relationship financing, in addition to relying on contracts for governance, supply and demand parties also need to govern relationships.
3. Policy environment of supply chain finance
In recent years, the support policies of supply chain finance have been continuously increased.
In February 2016, the eight ministries and commissions such as the People's Bank of China issued "Several Opinions on Financial Support for the Stable Growth of Industry, Adjustment of Structure and Increase of Benefits", advocating for the exploration and promotion of the integration of industry and finance, and the development of pilot financial service extensions for enterprise group finance companies.
In October 2016, the National Development and Reform Commission issued "Several Policy Measures to Promote the Healthy Development of Private Investment", emphasizing the establishment of a property rights pledge registration system to achieve information sharing so that financial institutions can improve and improve the financial services of small and micro enterprises.
In March 2017, the "Guiding Opinions on Financial Support for the Construction of a Powerful Manufacturing Country" jointly issued by the People's Bank of China and other five ministries and commissions proposed that financial institutions should be encouraged to rely on core enterprises in the manufacturing industry chain to actively develop pledged loans and factoring of accounts receivable. Various forms of supply chain financial business can effectively meet the financing needs of upstream and downstream enterprises in the industrial chain.
In October 2017, the General Office of the State Council issued the "Guiding Opinions on Actively Promoting Innovation and Application of Supply Chain", in which "actively and steadily develop supply chain finance" is one of the six key tasks.
In April 2018, eight departments including the Ministry of Commerce jointly issued the "Notice on Conducting Pilot Supply Chain Innovation and Application". The central bank decided to release 400 billion yuan of incremental funds to increase the source of low-cost funding for small and micro enterprise loans.
Under the environment of good policies, the supply chain financial market has attracted more and more market players to participate in the competition. In addition to banks and other financial institutions, industry leaders, logistics companies, financial information service platforms, etc. are all trying to implement services as the main body of implementation.
4. The ecology of supply chain finance
The supply chain financial ecology is composed of the roles and structural relationships among the participants in the supply chain finance, as well as their relationship with the system and technological environment. The supply chain financial ecology consists of four layers.
(1) Supply chain financial beneficiaries
The main beneficiaries of supply chain finance mainly refer to the upstream and downstream small and medium-sized enterprises that are attached to the core enterprises in the supply chain in the process of production and trade, and use the credit endorsement of the core enterprises to alleviate the problem of difficulty in financing and expensive financing.
(2) Supply chain financial implementation subject
In the early stage of the development of supply chain finance, the main body of implementation was commercial banks. With the continuous development and innovation of the supply chain financial industry, leading players in the industry, logistics companies, financial information service platforms and other parties that have grasped the real trade information of upstream and downstream enterprises in the supply chain have used their own advantages to provide supply chain financial services.
(3) Supply chain financial funds
Supply chain financial capital is the main body that directly provides financial resources, and also bears the ultimate risk.
(4) Supply chain financial basic services
The development of supply chain finance requires supporting infrastructure service providers, such as technical service providers, supply chain financial information service providers, and industry organizations.
5. The function and main value of supply chain finance
a) Track supply chain capital flow
An important reason for the emergence of supply chain finance is that traditional supply chain management cannot effectively manage the capital flow on the chain. The core of supply chain finance can be said to be the control of the flow of financial resources among members of different supply chains.
b) Reasonable allocation and use of financial resources
The emergence of supply chain finance makes the enterprise relationship on the chain more collaborative than competitive. The use of financial resources not only considers the profit of an enterprise, but also maximizes the interests of all enterprises in the entire supply chain.
c) Expand the source of financial resources
The goods and services provided between members of the supply chain and service providers need to be paid, so there is a need for financing. Supply chain finance improves the possibility of members on the chain to obtain capital and raise funds in the financial market, and improves the financing situation of enterprises on the chain.
(2) Main value
a) Reduce financing costs
The core enterprises have a long-term trade relationship with the upstream and downstream SMEs of the supply chain. They not only have a comprehensive understanding of the operation status, credit status, management level and other aspects of the SMEs in the supply chain, but also choose control through orders and sales channels. The future survival and development of SMEs. Through the guarantee of the core enterprise, the bank converts the credit to the SME into the credit to the core enterprise, solves the problem of information asymmetry, maximizes the capital utilization, and enables the SME to obtain financing at a relatively low cost.
b) Lower financing threshold
In the supply chain finance model, in order to cope with the generally low credit characteristics of SMEs, banks can only focus on each specific business transaction, appropriately dilute the financial analysis of enterprises and loan access control. During the financing process, the bank focused on investigating the true background of the single-deal business of the loan applicant and the historical reputation of the enterprise. Through the closed operation of the fund, the trade self-compensation was used to control the loan risk, so that some of the loans caused by the financial indicators did not meet the standards. Rejected SMEs can obtain loan financing based on the authenticity of the trade background of a single business.
c) Reduce financing risk
Through the control of property rights documents and the closed operation of financing funds, banks can control the flow of funds and logistics, so that risk monitoring directly penetrates into the production and trade process of enterprises, which is conducive to dynamic control of risks.
At the same time, supply chain finance has achieved a certain degree of isolation between bank credit and financing entity risks. The bank pays more attention to the authenticity and continuity of the business transaction background. Through a comprehensive review of the enterprise, the company ’s sales revenue is determined as the source of repayment of its financing. At the same time, the financing period is limited to match the trade cycle, so that the funds cannot be used passively. The risk of loans is relatively small. The reduction of risks encourages banks to expand the scope of financing business for SMEs, and to some extent alleviates the problem of refusing to lend.
The application of blockchain in the field of supply chain finance
1. Pain points in the supply chain finance industry
(1) Supply chain information is opaque
In the traditional supply chain operation, the problem of information islands is widespread, and the systems of the participants on the chain are cut apart from each other, and they each save information, and there is no effective sharing channel and channel. For example, the transaction information of the core enterprise and its upstream and downstream will only be stored in the systems of both parties; the credit information of financial institutions is only in the hands of financial institutions. Due to the opaque information of the entire supply chain, participants cannot understand all the information flow and progress in the entire transaction process, thereby reducing the operational efficiency of the supply chain and increasing the difficulty and risk of operations.
For financial institutions such as banks, opaque information prevents them from obtaining valid data from SMEs, and then doubts the authenticity of the entire transaction, making many real and urgent financing needs rejected.
(2) Limitation of credit target
Due to the existence of information silos, financial institutions, for the sake of risk management and control, are only based on the core credit of the core enterprise, and vertically grant credit to upstream and downstream enterprises. The spread of risk transmission makes the service targets of financial institutions mostly limited to first-tier suppliers and distributors, and the financing needs of SMEs at the far end of the supply chain are difficult to meet.
(3) High default risk
The existing supply chain management system has a relatively weak binding capacity on chain enterprises, leaving a large operational space for behaviors that may cause defaults such as malicious false transactions and broken capital flows. The final cash settlement between suppliers and buyers, financiers and financial institutions relies too much on the contractual spirit of both parties, especially when multi-party transactions or multi-level transactions are involved, the risk of default will multiply.
(4) Supervision is difficult
So far, the electronic degree of supply chain finance is still low, the documents are still mostly in paper form, and the operation is also mostly dependent on humans. In addition, the inter-bank information is not interoperable, and the acquisition of regulatory information is lagging. Repetitive financing with the same document, or fictitious trading background and property rights vouchers, such as false warehouse receipts for steel trade financing in Jiangsu and Zhejiang in 2012 and gold jewelry processing enterprises in the Pearl River Delta in 2015 to construct speculative arbitrage in trade financing.
(5) Financing is difficult and expensive
In the current market environment, credit sales are the main settlement method for buyers, and the corresponding billing period has also been extended from 30 days to 60 days, ranging from 90 days to 180 days. There is a large funding gap for suppliers upstream of the supply chain. However, the credit transfer of core enterprises cannot reach the end of the supply chain, making it difficult for enterprises to obtain high-quality loans from banks. The interest rate of private lending is high, and it is more serious that financing is difficult.
2. Technical characteristics of blockchain
Blockchain technology is a new application model of computer technology such as distributed data storage, point-to-point transmission, consensus mechanism, encryption algorithm, etc., which is of great significance to solve many problems in the field of supply chain finance.
(1) Network structure
The blockchain is based on a peer-to-peer network structure, which enables participants to collaborate peer-to-peer and mesh. This provides convenience for cross-institutional coordination without significant hierarchies or affiliations between participants, without negotiating on the organizational structure, as long as the business rules are solidified into the initial settings of the blockchain, it can be carried out, simple and fast .
(2) System stability
Blockchain is highly stable and can be used as a basic platform for supply chain financial operations to meet the basic requirements for system stability of supply chain financial business. Supply chain data can be effectively protected. Supply chain financial business processes can be in the block Stable operation on the chain system.
(3) Trust system
Each node can conduct secure transactions on the basis of no trust. The biggest role of blockchain is to effectively solve the "trust" problem. The data security on the blockchain is high, and transactions cannot be withdrawn. At the same time, supply chain financial systems that use blockchain technology often undergo stricter identity authentication and anti-money laundering, which constitutes a blockchain trust system.
(4) Storage technology
The distributed and collectively maintained storage method allows traders to be anonymous and the transaction information is completely transparent. Participants jointly maintain a ledger that is visible to all data. Through distributed encrypted storage of data, the data cannot be tampered with, and the integrity is effectively guaranteed.
3. Supply chain financial solutions based on blockchain
From the above analysis, it can be seen that the blockchain technology is very suitable for the supply chain financial business involving multiple parties.
(1) Transparency of supply chain information
The participants in the supply chain ecology jointly maintain a public ledger according to the agreement, and each transaction is recorded after consensus by all. All the data on the public ledger is visible, which can effectively ensure the access right and data portability of the data subject, giving the data subject more flexible handling of their own data. The hierarchical encrypted storage on and off the data chain can ensure the accuracy and non-tampering of data under the premise of data security and privacy, and achieve more efficient autonomous transfer of data between different applications, in compliance with the EU ’s General Data Protection Regulation (General Data Protection Regulation, referred to as GDPR) technology development trend after the release.
(2) Credit transfer
In the traditional financing process, the core company's endorsement credit will continue to weaken as the receivables' claims are transferred. Blockchain technology can map the actual debts of accounts receivable to the chain, and can realize business operations such as transfer and liquidation based on the display laws and compliance requirements. The design of the consensus mechanism of the blockchain, the data on the chain cannot be tampered with, Traceability, value bearing, and the core endorsement utility can be passed along a credible financing link, thereby solving the problem that the core enterprise credit is difficult to pass to the end of the supply chain.
(3) Smart contract management and performance risk
The core of the value of finance is the assets generated through cross-cycle capital allocation, and the smart contract technology of the blockchain can carry assets in such diverse scenarios. Smart contracts are an important development direction of blockchain applied in business scenarios. It is a special protocol that encapsulates a number of states and preset rules, triggering execution conditions, and specific scenarios of the response plan, and is written in the form of code in the blockchain contract layer.
The form of performance based on smart contracts can not only ensure the smooth execution of the contract in the absence of third-party supervision, but also eliminate the risk of default caused by manual operations.
(4) Improvement of regulatory convenience
Encrypt the supply chain finance information and achieve traceability, ensuring the authenticity and accuracy of the data; at the same time, the electronicization of paper documents and the application of smart contracts through the blockchain can effectively obtain regulatory information, Analysis and early warning of capital flow can timely analyze and verify the authenticity of the trade background. Therefore, the application of blockchain technology greatly facilitates supervision and conforms to the trend of increasingly strict financial supervision.
(5) Reduce financing costs and improve financing efficiency
The combination of blockchain technology and supply chain finance allows upstream and downstream small and medium-sized enterprises on the chain to conduct trade authenticity reviews and risk assessments more efficiently. At the same time, due to the ability of core companies to pass credit, the tedious verification due to trust crises in traditional processes The procedures can be greatly reduced, and the phenomenon of financial institutions refusing to lend money can also be improved.
The application of blockchain technology reduces financing costs and improves the efficiency of financing, providing a great help to fundamentally solve the problem of financing difficulties for SMEs in the supply chain.
4. Blockchain empowers the application of supply chain finance-taking account receivable financing as an example
The combination of supply chain finance and blockchain is one of the current popular areas of supply chain technology application. The application of blockchain technology in supply chain finance has obvious advantages. The following uses account receivable financing as an example to illustrate.
(1) Main process nodes
(2) Existing process pain points
a) Paper documents, offline manual operation
b) Information is scattered and opaque, the source cannot be traced
c) It is easy for enterprises to repeat financing with the same documents, or to fictitious transaction background and credit certificate
d) The financing process requires multi-sector collaboration, long circulation time, and low efficiency
e) Poor data availability, unable to effectively manage capital flows and provide early warning, and at the same time fail to analyze and verify the real background of trade
f) Banks submit data manually, and authenticity and accuracy are difficult to guarantee
g) The effectiveness of information synchronization is poor
(3) Advantages of blockchain technology
a) End-to-end information transparency. All relevant parties share information and conduct transactions through a public ledger, improving the efficiency and accuracy of decision-making;
b) Trading smart contract. All transactions are implemented through smart contracts, and only transactions that meet the conditions will be executed to reduce the risk of counterparties;
c) Electronic paper documents. All paper documents are electronic, improving process efficiency and reducing operational risks;
d) Information encryption can be traced back. All information on the chain is encrypted and traceable, ensuring the authenticity and accuracy of the data, while also reducing the difficulty and cost of the audit;
e) The operation coordination of the participants. All relevant parties jointly maintain process nodes to ensure information synchronization;
f) Distributed storage of data. The distributed storage of information and data ensures the integrity of the data.
Blockchain supply chain finance exploration of existing trade financing platforms
In the process of development and application exploration of blockchain technology, its application in the field of supply chain finance has always been a hot topic. Looking at the domestic and international blockchain applications, there have been many application solutions for various application scenarios in the field of supply chain finance.
At present, starting from the innovation of supply chain financial services on the blockchain, trade financing platforms aimed at solving existing trade problems are also emerging. The following will selectively introduce and analyze three more representative and influential platforms.
1. Hong Kong's "trade linkage" trade financing platform
"Trade Linkage" (eTradeConnect) is a trade financing platform initiated by the Hong Kong Monetary Authority and jointly developed by an alliance of 12 major Hong Kong banks. It officially went into operation on October 31, 2018. The platform not only advances trade finance with cumbersome processes in the past to a new digital era, but also brings various advantages:
(1) Share transaction documents with trade participants who need to obtain documents in real time to ensure data privacy and security;
(2) Improve the transparency of bookkeeping trade and make the order details clearer;
(3) Since the transaction information on the platform can be verified and compared, the risk of financing fraud can be reduced;
(4) The reduction in the risk of over-financing leads to the increased willingness of banks to raise funds;
(5) Trade documents are digitized with a single standard, eliminating the time for verification and reducing manual errors.
The "Trade Linkage" platform is conducive to reducing costs and simplifying the process based on paper documents. It is also conducive to enterprises to obtain liquidity more quickly and flexibly, and it is conducive to filling the trade financing gap of SMEs. The revolutionary transformation has a great impetus.
2. we.trade innovative digital trading platform
In July 2018, we.trade completed the first real-time blockchain financial transaction. We.trade is an innovative blockchain platform formed by IBM, HSBC, Deutsche Bank and other nine founding banks based on Hyperledger Fabric technology. we.trade aims to eliminate financing gaps that hinder cross-border and domestic trade and promote trade among European SMEs. The platform provides many facilities for corporate financing:
(1) Abandon paper documents and create transaction orders online;
(2) Provide a simple user interface for enterprises to manage the entire transaction process;
(3) Various trade financing services are available;
(4) Payment commitment based on smart contract execution;
(5) The platform is fully automated, shortening the transaction cycle.
The innovation of the platform in the field of trade finance business and supply chain finance enables enterprises of all sizes to conduct cross-border transactions more efficiently and securely, and promote economic growth in Europe and even the world. At present, the platform has used Europe's geographic and policy advantages to expand its business to many European countries. The practice of blockchain-based cross-border trade supply chain finance is steadily advancing, and it has played a role in demonstrating similar services for other platforms.
3. Marco Polo Trade Finance Platform
Marco Polo (Marco Polo) trade financing platform is jointly built by blockchain software company R3, platform technology service providers TradeIX and ING, Commerzbank and other large banks based on Corda. The goal of the platform is to achieve real-time connections between participants and promote the intelligence and transparency of trade financing. The platform solves the key challenges in the current trade financing ecosystem:
(1) Cost allocation. The platform can allow many members and participants to bear the cost together, rather than one party or several parties bear the cost;
(2) Reduce risk. The data on the blockchain can be verified by all parties involved, and it has regulatory friendly characteristics, which can effectively reduce credit and regulatory risks;
(3) Network effect. The ecological scale of the platform can realize the network effect, which provides conditions for solving structural technical problems in trade;
(4) Synergy. The cooperation and sharing of professional knowledge and emerging technologies will promote the creativity and efficiency of the entire industry, so as to overcome the dilemma that a few enterprises cannot solve the problems of the whole industry alone.
At present, the platform has launched three trade financing businesses, including account receivable discounting, factoring and payment commitment. In 2019, the platform will accelerate the exploration in the field of trade finance and supply chain finance. It is expected to launch more trade finance businesses, such as bank guarantees, payable financing, and asset mortgage loans.
The practice and innovation of the above platforms in the field of trade finance and supply chain finance is not a simple transformation of the existing transaction process and business model, but on the basis of blockchain technology, combined with industry pain points, to build new processes and new production Relationship and innovate business models.
At present, the above platforms are all based on the implementation of some businesses in the field of supply chain finance, which confirms from the front that blockchain technology can effectively solve the pain points of the traditional supply chain finance industry.
It is worth noting that these platforms have plans to achieve interconnection with other similar platforms, such as trade linkage and we.trade have begun to proof-of-concept of the two platforms. If blockchain technology can help build a global trade network, not only will the development of supply chain finance reach a new level, but it will also trigger a blowout of global trade.
The People's Bank of China Trade Finance Blockchain Platform Explores Blockchain Supply Chain Finance
1. Platform Introduction
(1) Platform goals
The People ’s Bank of China Trade Finance Blockchain Platform is a financial technology infrastructure initiated and built by the People ’s Bank of China, the Digital Currency Research Institute and the People ’s Bank of China Shenzhen Central Sub-branch, dedicated to building an open financial trade based on the Bay Area and radiating the world Ecology. The goal is to create an open, credible, safe, standard, compliant, efficient, public welfare, and shared trade financial asset registration, custody, transaction, and circulation platform based on blockchain technology.
At the same time, it empowers small and medium-sized enterprises, serves the real economy, reduces corporate financing costs, improves financing efficiency, actively explores innovative blockchain-based trade financial product forms and financial regulatory policies, and promotes Shenzhen-Hong Kong cooperation and the Guangdong-Hong Kong-Macao Greater Bay Area through trade financing Development lays the foundation for the globalization of the digital economy.
The People's Bank of China Trade Finance Blockchain Platform is an effective attempt of blockchain technology in the field of supply chain finance. Since the first phase of the project was officially launched on September 4, 2018, it has successively launched three application scenarios of "multi-level financing of accounts receivable", "external payment tax filing form", and "supervision of international trade accounts". It has received extensive attention and recognition from all walks of life.
(2) Platform characteristics
The supply chain finance and trade finance scenarios are complex. Its smooth development, in addition to the services provided by commercial companies, is also inseparable from the public services provided by government departments and private institutions such as taxation, arbitration, and industry associations. In a sense, supply chain finance is not only a fund demand and the internal affairs of the provider, but also a public matter that requires the participation of many social groups. This makes an ideal trade and finance platform have certain public attributes.
In order to better serve the real economy, it is often necessary for the government to promote the construction of public service platforms. The advantage of this type of model is that due to the promotion of public interests by the government departments, the platform has well resolved the disputes between the construction body and the governance mechanism, opened up users, scenarios and public services, realized resource integration, and also facilitated government supervision and promotion. Regulatory efficiency.
(3) The platform helps the financial innovation of the blockchain supply chain
The People's Bank of China Trade Finance Blockchain Platform is committed to building an open financial trade ecosystem based on the Guangdong-Hong Kong-Macao Greater Bay Area, facing the country and radiating the world.
On the platform, if the information is complete, from the time the customer submits the loan application to the bank to complete the loan, the operation time is only about 20 minutes, which greatly shortens the financing time, improves the financing efficiency, and reduces the financing cost of SMEs. This is the landing of blockchain in the field of supply chain finance. It is a major practical achievement of supply chain financial innovation based on blockchain. With the continuous expansion of platform business in the future and the continuous participation of participants, the platform will also be supply chain finance. An excellent platform for innovative research and practice.
The neutrality, professionalism and authority of the People's Bank of China's trade finance blockchain platform are showing their unique advantages. They provide a way to solve the problem of difficulty in financing for small and medium-sized enterprises in China, and to overcome the pain points in the supply chain finance and trade finance industries Effective solutions from the perspective of FinTech.
2. Major platform breakthrough
The People's Bank of China's trade finance blockchain platform has six major breakthroughs compared with traditional business processes, and is an important achievement in the practice of blockchain supply chain finance.
(1) Break through the problem of cross-institutional, cross-platform, and cross-regional platforms that are difficult to achieve interconnection and interoperability, and provide an integrated, seamlessly linked platform;
(2) Break through the pain points of traditional processes that each participant cannot collaborate on related business processes through the same platform, and change the existing collaboration mechanism through blockchain technology to achieve a new mechanism for business process nodes to be jointly maintained by the participants;
(3) Break through the boundaries of traditional closed systems and build an open platform and open ecology with the open source and open technical characteristics of blockchain;
(4) Break through the problem of repeated development of platforms and poor compatibility in the traditional business. By providing the underlying technology platform, participants only need to develop business applications and complete the layout on the platform to perform the corresponding business process operations;
(5) Break through the traditional waterfall processing method, all transactions are executed through smart contracts and process automation is implemented on the chain;
(6) Break through the difficulty that trust cannot be passed in the traditional process, and increase the trust between the participants through the on-chain process automation and digitalization.
3. Future outlook
The People's Bank of China's trade finance blockchain platform will continue to improve mechanism construction and vigorously promote technological innovation and business innovation, thereby playing a more active role in serving SME financing, stimulating the vitality of trade finance innovation, and serving the national real economy.
(1) Vigorously improve the governance mechanism of the People's Bank of China Trade Finance Blockchain Platform
The success of a platform depends on the prosperity of the entire platform ecology, so it requires not only an open technical architecture, but also a consensus-based governance mechanism and a market-oriented operating method to fully mobilize the enthusiasm of platform participants and attract more banks and enterprises Participate and use to gather more data and resources to maximize the network effect and synergy effect.
(2) Continue to promote the technological innovation and business innovation of the People's Bank of China trade finance blockchain platform
The platform's technical architecture should eventually be open source and open, allowing and encouraging participants to introduce different technology research and development forces, build node services based on different technology stacks, and provide external services. The platform architecture design should have the ability to take the initiative to evolve, technically continue to follow new trends, and the organizational structure must include new business scenarios and new participants, and promote technological innovation and business model innovation for the future.
In addition, it will actively promote the formulation of platform standards, including data, technology, and business standards, actively participate in the formulation of industry and international standards, and promote platform agreements to form a batch of influential data protocols and technical standards.
(3) Find the correct positioning, build the platform ecology, and do the basic work of "three links and one leveling"
a) Communicate data. The operating entity should focus on improving the basic data and working closely with various government departments to ensure the authority and comprehensiveness of the data to support the needs of upper-layer applications.
b) Connect users. Blockchain is a natural identity system. The platform can start from a unified user login system, integrate multiple user data sources, and exert the network effect of applications and users.
c) General policy. The Trade Finance Blockchain Platform Business Committee can play a role as a communication and coordination window with regulatory agencies, innovate under the premise of reasonable control, and the innovation results can provide reference for policy formulation, thereby forming benign interaction and positive feedback.
d) Technology platform construction. In the construction of technology platforms, the platform operators will maintain an open mind, learn from the industry's leading experience, and cooperate extensively with banks, third-party technology companies, universities, and research institutions to create an industry-leading excellent technology platform.
Summary and prospect of blockchain + supply chain finance
1. The problem of blockchain + supply chain finance
Although the solution of blockchain + supply chain finance eliminates many problems, there are still many problems and deficiencies that require sufficient attention.
(1) Participants do not cooperate
Supply chain finance is highly dependent on core companies, and companies need to bear additional responsibilities and risks transferred from banks. This is often unacceptable for companies.
(2) Low level of information
The supply chain financial business related information relies on the informationization of all enterprises in the entire supply chain. For small and medium-sized enterprises, the cost of informationization is relatively high, and the conditions for comprehensive informationization are lacking.
(3) Data privacy
It is a very serious problem for an enterprise to upload all transaction data in the business to the chain. In the process of data distribution, how to prevent data leakage and protect the privacy of the enterprise.
2. Suggestions for the implementation of blockchain + supply chain finance
Although the future is full of challenges, blockchain technology has already had more solid and convincing applications in the field of supply chain finance. The value of blockchain technology in supply chain finance is also constantly emerging. For the implementation of blockchain technology in the field of supply chain finance, there are the following suggestions, hoping to play a positive role in promoting.
(1) Strengthen blockchain technology innovation
Promote the innovation of key core blockchain technologies such as consensus mechanisms, cryptographic algorithms, cross-chain technology, and privacy protection. At the same time, we must learn from the industry's leading experience and cooperate with banks, colleges, and research institutions to build a technology platform.
(2) Explore the nature of supply chain finance and focus on business innovation
Before applying blockchain technology to supply chain finance, it is necessary to fully understand the essence and logic of each business in supply chain finance. You should not use a hammer to find nails everywhere. You must have an essential understanding of each business to find the correct practice path. . Supply chain finance also needs to innovate under the support of blockchain technology and combine mature technologies to create new business models and promote the supply chain finance industry to achieve another qualitative leap.
(3) Build a complete blockchain supply chain financial ecology
At present, the application of blockchain to supply chain finance does not yet have a complete ecosystem. In addition to designing a reasonable incentive mechanism to attract participants, the practice of blockchain technology in the field of supply chain finance requires a comprehensive layout, including technology Research, business model exploration, landing scenarios, standardization work, supporting facilities, financial supervision and regulations, etc.
In summary, supply chain finance is an important application area of blockchain technology, and supply chain finance naturally matches with blockchain. However, the application of blockchain technology in the field of supply chain finance should be viewed rationally. Research and innovation must also remain rational, focus on practice, and actively implement landing.