Standard Chartered has completed its first joint deep-tier supply chain financing transaction with Linklogis for Digital Guangdong and its suppliers using blockchain technology.
Using Linklogis’ ‘WeQChain’, a platform based on Chinese tech company Tencent’s blockchain technology to enable deep-tier supply chain financing, Standard Chartered and Linklogis enabled Digital Guangdong to have transparency of its whole supply chain, as well as cheaper access to credit for its suppliers.
Digital Guangdong is a Chinese-based service provider jointly owned by Tencent and state-owned China Unicom, China Telecom and China Mobile, which has processed more than 200 million transactions for the residents of Guangdong, a province in South China.
This transaction is the first after Standard Chartered and Linklogis – one of China’s largest B2B-focused, independent supply chain platforms – signed a memorandum of understanding in February.
Through this partnership, Linklogis aims to accelerate and develop growth within Standard Chartered’s global network, specifically targeting businesses importing into, and exporting out of, China and aiming to “build innovative technological applications to solve the fundamental financing problems faced by SMEs”, says its chairman and CEO, Charles Song.
“It is the first transaction that has been completed on the blockchain platform following the signing of the memorandum of understanding,” a spokesperson for Standard Chartered tells GTR. “It is a first for us, it is also the first time that the Linklogis platform has jointly delivered deep-tier supply chain financing with an international bank.”
Supply chain finance programmes often reach only the first or second tier suppliers, leaving the lower tiers at the end of the chain with financing at high rates or without financing at all. Blockchain technology is seen as a way to enable lenders to finance deeper into the supply chain, due to its ability to give transparency over the entire supply chain.
In this transaction, “Digital Guangdong’s invoices from its designated suppliers were digitalised and recorded onto WeQChain, which then issues eVouchers representing the underlying account receivable”, the spokesperson explains.
“Digital Guangdong’s direct suppliers (tier 1) can then split and transfer the eVouchers to their own suppliers, and their suppliers’ suppliers upstream (tier 2 and onwards). By presenting the eVouchers to the WeQChain platform, these deep-tier suppliers can access financing at more affordable rates, based on the anchor buyer’s credit rating.”
As for the partnership with Linklogis, the spokesperson says Standard Chartered is also exploring opportunities to leverage Linklogis data and analytics capabilities to boost its risk management and offer faster, more convenient credit to smaller enterprises. Standard Chartered’s MoU with Linklogis covers co-operation across both domestic and cross-border opportunities.
“This is one of the first projects we are working on together, and there is a lot more potential for where this could go. We can expect there will be more partnerships moving forward,” she adds.
This partnership follows Standard Chartered’s recent implementation of dltledgers’ blockchain-based platform to finance commodity trading companies’ supply chains. The solution allows traders to connect to their supply chain network and digitalise trade processes and financing documentation.
Standard Chartered has also embraced artificial intelligence (AI), launching a service to automate the retrieval of information from trade documents. In partnership with IBM, through a combination of optical character recognition , machine learning and natural language processing, Trade AI Engine looks to ease the traditionally manual processing of trade documentation. The solution is now live in 30 markets across Asia, Africa and the Middle East, with a further nine to follow shortly.