SINGAPORE - DBS Bank on Wednesday (Sept 11) launched its first multi-tier financing facility on a logistics blockchain platform to help small and medium-sized enterprises (SMEs) in China get faster access to trade financing.
With this technology, trade financing can be provided in 24 hours, compared with the weeks and months using the traditional paper-based approach, said DBS.
The blockchain platform named Rong-E Lian was developed in partnership with an undisclosed Chinese logistics player believed to be SF Group, according to industry sources. It offers multi-tier financing solutions - or financing beyond the anchor company's direct suppliers - to more than 1,000 suppliers in the company's supply chain ecosystem. This includes SMEs which may have limited access to trade financing due to their lack of scale or credit history.
DBS is able to verify the credentials of a supplier within seconds, by leveraging on the bank's application programming interface (API) to integrate its digital onboarding service, which requires facial biometric authentication, into the blockchain platform.
Once verified, the bank is then able to offer digital trade financing services to upstream suppliers, often SMEs, in the ecosystem within 24 hours.
Ginger Cheng, head of Large and mid-cap corporates, institutional banking group, DBS China, said that the blockchain platform is also integrated with various China government databases to further validate and verify the authenticity of the transactions made by suppliers in the ecosystem to mitigate risks.
"The transparency of information that blockchain technology offers also serves as an added safeguard against potential data manipulation," she added.
DBS first successfully completed its first multi-tier financing transaction on the Rong-E Lian blockchain platform with suppliers in the China-based logistics supply chain ecosystem in August. This comes on the back of the bank's other efforts to explore initiatives to deepen and broaden its partnership with businesses in the Greater Bay Area region, which includes Hong Kong, Macau and nine other cities in the Guangdong province.
DBS was said to be the first foreign bank in the Greater Bay Area to digitalise cross-border settlements with a one-stop digital payments and collections solution called DigiDocs in July. In addition, DigiDocs also offers the online booking of foreign exchange rates, allowing DBS customers to select their preferred exchange rate according to market real-time quotes for remittance payments.
Neil Ge, CEO of DBS China, said: "By using new technologies such as blockchain and APIs, we hope to democratise trade finance by providing SMEs more affordable and convenient access to bank credit to enable them to realise their business ambitions, serve their customers well and expand into new markets with ease."
Ms Cheng noted that the above was a "groundbreaking transaction" for DBS in China.
"We see continued traction and strong momentum in blockchain applications in trade finance as businesses start to recognise the benefits of the technology," she said. "But for blockchain to realise its full potential in trade finance, banks, government agencies and leading industry players will need to help bridge business networks to grow the depth and breadth of ecosystems across industries and borders."