China Everbright Bank (光大银行 ), a major commercial bank in China is debuting a blockchain-based supply chain finance solution by Ant Financial.
According to Shanghai Securities News, China Everbright Bank (CEB) announced that it had launched a supply chain finance blockchain. The “duo” points to the intersection between blockchain and supply chain, a network services platform designed to handle supply chain-related financial transactions.
CEB is the first Chinese bank to deploy Ant Financial’s Duo Chain. Duo Chain was originally unveiled in 2019 as a way to boost supply chain finance through blockchain technology.
What Is Supply Chain Finance?
Supply chain finance (SCF) is a set of technology-based business and financing processes that link the various parties in a transaction—buyer, seller, and financing institution— to lower financing costs and improve business efficiency. SCF provides short-term credit that optimises working capital for both the buyer and the seller.
SCF utilises business solutions that optimise working capital and provide liquidity to businesses. Under SCF, suppliers sell their invoices or receivables at a discount to banks or other financial service providers, often called factors. In return, the suppliers get faster access to the money they are owed, enabling them to use it for working capital, while buyers generally get more time to pay. Instead of relying on the creditworthiness of the supplier, the bank deals with the buyer.
To date, a number of companies worldwide have already deployed blockchain-based SCF solutions in an effort to increase the transparency of transactions and optimise costs of credit access.
Implementing Duo Chain
By implementing Ant Financial’s Duo Chain technology, CEB intends to improve the security of SCF, and eliminate fraudulent transactions. According to reports, the Duo Chain platform allows users to complete identity verification and electronic signatures with CEB, while recording all relevant transactions to a distributed ledger for tracking purposes.
CEB reportedly added that the bank also integrated internal and external data management platforms, enterprise credit platforms, and other connected systems to raise efficiency and quality of its financial services.