Yang Bingbing (杨兵兵), chief operations supervisor and digital finance manager of China Everbright Bank, said to China Securities Report that Ant Financial and Everbright were stepping up their fintech cooperation amidst ongoing efforts to contain COVID-19.
“Both are our parties have not ceased to engage in development and testing despite the novel coronavirus outbreak,” said Yang. “We’re both looking for appropriate companies to ‘go on chain’ – go on the blockchain and the supply chain.”
Everbright Bank recently became one of the first lenders in China to integrate with Ant Financial’s “Dual Chain Connection” (双链通) platform to provide blockchain-driven supply-chain financing.
Yang said that the platform provides an effective solution to the financing difficulties of smaller businesses in China.
“If enterprise A is the core enterprise and purchases 10 million yuan in raw materials from enterprise B, then enterprise B generates 10 million yuan in accounts receivable.
“When enterprise B needs funds, in the past it could only transfer or pledge these accounts receivable.
“With the Dual Chain Connect platform, enterprise B can use the 10 million yuan in accounts receivables as ‘cash, ‘ as well as break it apart, to use for example as 500,000 yuan to pay enterprise C for procurement ‘on the chain.’
“In actuality this 500,000 yuan is still based on the accounts receivable for enterprise A, and this credit is transferred forward via the Dual Chain Link.”
Yang points out that the enterprise A – the core enterprise, is usually a larger company of sound standing, while B, C, or even D, E and F, are likely to be small or even micro-enterprises.
The transfer of accounts receivable amongst them helps to resolve their funds settlement dilemmas, using credit documentation to complete payments instead of cash.
The application of blockchain-technology to supply chain financing can reduce the amount of time that vendors need to obtain loans from several months or even a year to just several minutes.
“What’s more important is that once the Dual Chain Connect model runs smoothly, overall financing costs that are on chain will all be reduced,” said Yang.
“Banks can reduce unnecessary administrative costs, and effectively reduce various kinds of risk.”
Yang said that Everbright’s “Contact-free Loans” (无接触贷款) have also become another key focal point for cooperation with Ant Financial, helping to facilitate access to funds for micro and small-enterprises seeking to resume work and production post-COVID-19.
Ant Financial and Everbright have already worked together on the use of blockchain technology to drive supply-chain financing platforms.