Banking News

Standard Chartered, Linklogis execute blockchain supply chain finance transaction

standard chartered

Today Standard Chartered announced it completed the first blockchain transaction with supply chain finance company Linklogis. The financing was for upstream suppliers of Digital Guangdong, a joint venture between Tencent, China Unicom, China Telecom and China Mobile.

Digital Guangdong develops digital government services. So far, it has released 700 applications and processed more than 200 million transactions.

The Linglogis’ blockchain “WeQChain” targets deep-tier supply chain finance. In other words, the suppliers of the supplier. Hence, the aim is to achieve transparency beyond the first tier of suppliers.

The goal is two-fold. The platform gives larger suppliers greater visibility over their supply chains. And for the SME suppliers, they get cheaper credit because there’s a lower risk given the bank knows the buyer has approved the invoice.

“WeQChain” uses Tencent’s blockchain technology. Tencent owns China’s dominant chat application WeChat and is also an investor in Linklogis.

Having proven the effectiveness, Standard Chartered and Linklogis are exploring other supply chain ecosystems.

“Our clients today have to compete not just on their individual strength, but also on the combined strength of their ecosystems,” said Xie Wen, Head of Commercial Banking China at Standard Chartered. “Through our cooperation with Linklogis, and by leveraging blockchain technology, we will be able to offer our clients a distinct service to empower their ecosystems.”

Six months ago, Standard Chartered first announced a deal with Linklogis. The supply chain platform company was founded in 2016 and in 2018 received $220 million in Series C funding led by the Singapore Government Investment Corporation (GIC). Apart from Tencent, other investors include CITIC and Bertelsmann. By September 2018, the company’s accumulated transactions totalled almost 30 billion yuan ($4.5 billion).

StanChart and blockchain trade finance

Standard Chartered is very active in blockchain for trade finance. In January its Singapore subsidiary participated in a blockchain transaction for Agrocorp. The platform was dltledgers, a startup that has processed a billion in trade finance in under 18 months.

The bank is a member of the R3 Marco Polo trade finance consortium where the technology partners is TradeIX. In August last year, the bank announced that it was working with TradeIX and Siemens Financial Services to develop blockchain-based bank guarantees for financial services. The technology used is R3’s Corda.

The bank is also a founding member of eTradeConnect, the trade finance platform set up by the Hong Kong Monetary Authority. ETradeConnect launched at the end of October and is powered by Hyperledger Fabric.