Blockchain enabling supply chain finance

Time:2020-10-7

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Difficulties in financing of small and micro enterprises

The origin or original intention of supply chain finance is to solve the many pain points of “financing difficulty” of a large number of small and micro enterprises in the industrial chain. For small and micro enterprises, they have many problems and difficulties in the process of operation and development, such as the poor credit situation of small and micro enterprises, difficulties in obtaining financial assets, unstructured information, and many dimensions of analysis and decision-making.

In conclusion, financial institutions are faced with many inherent deficiencies when providing services to small and micro enterprises, which lead to low efficiency, high cost and difficult risk control in the financing process of small and micro enterprises.Blockchain enabling supply chain finance

Therefore, we want to solve these problems faced by small and micro enterprises through supply chain finance. We believe that the essence of supply chain finance is core enterprise + upstream and downstream enterprises of industrial chain + financial institutions + risk control, so as to solve the problem of “financing difficulty” of small and micro enterprises.

Four core advantages of blockchain Technology

Let’s return to the theme of blockchain. I believe everyone is familiar with the four core advantages of blockchain, including consensus mechanism, tamper proof and traceability, smart contract and distributed ledger. In conclusion, we believe that blockchain is a kind of tamper proof and traceable distributed ledger formed through smart contract in an uncertain environment.

So what changes can blockchain + supply chain finance bring? We believe that it can shape a trust value system, mainly from four aspects. The first is identity trust, which ensures the identity of users based on key and digital certificate, and realizes multi-party protocol on the chain.

The second aspect is multi-party sharing. The data can not be tampered with and the whole process can be traced through multi-party data backup.

The third aspect is privacy security, which ensures the privacy of transactions through cryptography and multi chain technology.

The fourth aspect is value circulation, which takes the assets on the chain as the only certificate to exercise rights and interests, and ensures the reliable and orderly circulation of financing business through smart contracts.

Blockchain enabling supply chain finance

Tencent cloud is committed to building a comprehensive supply chain financial service ecosystem

Tencent cloud is committed to building an all-round supply chain financial service ecosystem (as shown in the figure below). On the far left side, it will receive some capital channels, such as banks and funds; on the right side, it will connect to small and micro enterprises from various industries served by supply chain finance. Then, it needs a lot of financial technology to connect the capital side and the asset side, such as blockchain, big data, Internet of things, etc. in addition, due to the circulation of funds in the whole process, some risk control links and monitoring of subsequent operations will also be involved.

In a word, it is to solve the problem of “financing difficulty” of small and micro enterprises through the use of financial technology technology including blockchain to realize the capital side + asset side + core enterprises.

Blockchain enabling supply chain finance

Analysis on the current pain points of accounts receivable financing in Supply Chain Finance

In the field of supply chain finance, accounts receivable financing is a typical and common scene, but there are still some pain points in the current process of accounts receivable financing.

First of all, there are many limitations in the operation method of using the traditional current assets such as bills receivable and accounts receivable as credit certificates, which are difficult to transfer, and difficult to prevent operational risks and fraud risks, which are easy to form bad debts. These problems seriously restrict the development of accounts receivable financing business.

The second point is that in the multi-level supplier model, the traditional factoring, accounts receivable pledge, bill discount and other receivables supply chain financial models can only meet the financing needs of the upstream suppliers of core enterprises, but can not penetrate the credit of core enterprises to downstream SMEs.

The third pain point is that the current bank acceptance bill can only solve part of the settlement and financing needs, and the cost of enterprises and banks is very high.

Tencent cloud blockchain accounts receivable multi level circulation product architecture

The figure below shows the product architecture of Tencent cloud blockchain accounts receivable multi-level circulation. The top layer is the whole business function of multi-level circulation, involving suppliers, core enterprises and financial institutions.

The next layer is Tencent cloud blockchain tbaas platform, which mainly manages the network life cycle of blockchain, and then includes some other tools such as key management and Ca services.

Because a large number of trade authenticity verification will be involved in accounts receivable financing, we will also call some trade authenticity verification services such as enterprise authenticity verification, invoice verification, AI medium query, etc.

In addition to the verification of trade authenticity, we will also provide some functions such as digital portrait of the enterprise itself, auxiliary functions of AI, and post loan risk warning and management.

Blockchain enabling supply chain finance

Core advantages of multi level circulation of accounts receivable in Tencent cloud blockchain

In general, Tencent cloud blockchain accounts receivable multi-level circulation core advantages have four. First of all, it has financial level security. We have introduced CFCA certificate and national secret algorithm to ensure data security and privacy.

The second is the automatic settlement of contracts. According to the confirmation relationship of the whole process of the deposit of certificates on the blockchain, the clearing contract is formed and the clearing is completed automatically.

The third is the whole process of online, that is, through the PC end and small programs, to achieve the full life cycle of assets online operation, effectively reduce operational risk.

Finally, it is credit penetration, which transfers the credit of core enterprises from the first level suppliers to the last level suppliers, so as to alleviate the financing difficulties and high financing costs of suppliers.

Blockchain enabling supply chain finance

Through the multi-level circulation of accounts receivable of Tencent cloud blockchain, core enterprises, small and medium-sized enterprises, financial institutions and regulatory agencies can achieve win-win cooperation.

Blockchain enabling supply chain finance

Pain points of commodity industry

Firstly, due to the lack of natural credit qualification of SMEs, there is a natural mismatch with the traditional credit approval requirements. Therefore, for SMEs in the bulk commodity industry, the only breakthrough is how to form a solution based on goods control.

Secondly, the confirmation of the right of movable property is different from that of real estate. Bulk commodities rely more on the supervision of goods, warehouse receipts, contracts, invoices, etc., but there is often no authoritative third-party registration agency for these information.

Digital asset management of blockchain enabled warehouse receipt pledge

Based on these two industry pain points, we have made some transformation based on the blockchain, and realized the asset digital management by enabling warehouse receipts of bulk commodities. Because in the bulk commodity industry, warehouse receipts are used as proof of ownership of goods. Therefore, we generate a pass through the warehouse receipts through the blockchain. When the holders of warehouse receipts have financing needs, they can mortgage the warehouse receipts to financial institutions to obtain financing.

When the financing matures, the holder returns the financing to the financial institution, and the institution will inform the warehouse to release the pledge, and then the warehouse receipt owner can redeem the corresponding goods.

In a word, it realizes the establishment of digital assets, the management of property right certificate, the more efficient intelligent warehouse management and the sharing of warehouse information through the blockchain.

Blockchain enabling supply chain finance

Value embodiment of blockchain + chattel pledge financing scheme

We believe that the value of the block chain mortgage financing scheme is mainly reflected in three aspects. Firstly, it improves the quality of risk control and financing efficiency, and provides more credible warehouse receipt assets for financial institutions.

Secondly, it dredges the channels for capital to enter the real economy and helps the real enterprises solve the financing problems.

Finally, it is necessary to set up an innovative benchmark of industrial blockchain warehouse receipts to help the construction and improvement of the infrastructure of the bulk commodity industry.

Blockchain enabling supply chain finance

reminder: a large number of cases and the application practice and thinking of blockchain enabling supply chain finance are also shared in this live class. It is recommended that interested students watch the full course video for learning, and click the beginning of the article“Click to watch the big guy share”Then jump to watch~

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