Banking News

China launches blockchain SME financing with Ping An, ICBC, CCB

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Yesterday, China’s Guangdong province launched a blockchain platform for small and medium enterprise financing. Dubbed as the Guangdong Provincial Small and Medium Enterprise Financing Platform, it implements credit analysis and evaluation of SMEs for faster processing of loans.

On the same day of its launch, the blockchain platform processed a 1.12 million yuan ($160,600) loan from Industrial and Commercial Bank of China (ICBC). Along with faster processing of the loan, it was claimed the platform also reduced the interest rates to 5.5% from 18%.

The Guangdong SME Financing Platform enables credit analysis by connecting to 213 types of data from 26 government departments and collects information on 11 million SMEs across the province. For loan disbursal, the platform connects to 129 banks such as the China Construction Bank, ICBC and Ping An Bank.

To help with credit analysis, the platform has been linked with Ant Financial and Baixing Credit Reporting. Additionally, the platform has launched numerous financial products, including direct financing, indirect financing, and supply chain financing.

The platform allows banks in China to query different government organizations to gather data about SMEs. This expedites the process of loan approval and disbursal with the blockchain providing a ted communication infrastructure.

He Xiaojun, director of the Guangdong Provincial Local Financial Supervision and Administration Bureau, said that the blockchain platform is expected to serve 300,000 customers this year, and aims to hit 1 million by the end of 2022.

“In the past, corporate financing had to run at least five banks, submit at least ten copies of paper materials, approval time was at least 30 days, and often need to find an intermediary, financing costs are generally above 18%,” Xiaojun told Sina Finance. In a survey conducted by the provincial department, it was found that the most significant pain point when financing SMEs is the lack of business data.

Ye Wangchun, Chairman and CEO of OneConnect said that by “cross-checking with government authority data, it solves the problem of the authenticity of SMEs’ credit and turns business information into corporate credit.” OneConnect is a blockchain and AI company founded by Ping An.

The OneConnect CEO introduced the platform at the event, and the company is the technology partner. The firm was previously involved in a supply chain finance platform One Enterprise Chain encouraging enterprises to help with their SME suppliers’ financing.

OneConnect has been very active of late. In December it listed on the New York Stock Exchange and this week unveiled its Japanese joint venture with SBI Group.