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Bank of China: Industrial Financial Services Based on Blockchain



Abstract The blockchain-based industrial financial service project was initiated by the Bank of China, and Sunline Technology was the first batch of service providers. The project is mainly used in supply chain financial scenarios, and it is expected to serve up to 20,000 corporate customers and individual customers in the upstream and downstream of the industrial chain and derivative ecology. The project has built a financial ecology that combines information on the "four streams" of supply chain business flow, logistics, information flow, and capital flow with digital credit certificates (BOC E certificates) that can be dismantled and refinanced. Utilizing the transferable, detachable, and financing features of BOC E-certificates, suppliers can split a single claim and choose financing or transfer as needed, and core corporate credit can penetrate to multi-level suppliers. The project has passed the legal compliance assessment and technical security assessment, and has set up a risk prevention and control mechanism and a complaint response mechanism, and the overall project solution design is relatively complete. However, at present, due to the "blockchain + supply chain finance" solution launched by many banks, including Industrial and Commercial Bank of China and China Construction Bank, which has achieved certain results, the project is facing greater pressure from market competition. Since the advent of Bitcoin in 2008, as the underlying technology supporting the Bitcoin network, the blockchain has gradually become known to the world, and has continued to evolve and innovate in practice. After more than ten years of exploration, blockchain technology, together with other emerging information technologies such as big data and artificial intelligence, has become an important support for the development of the digital economy in China and even the world. Become the infrastructure for building a global credit value network. 2020 is a critical year for the application and practice of China's blockchain industry. Under the joint promotion of the three forces of policy, technology and market, the application of China's blockchain industry has blossomed in many places, and various innovative practices have accelerated. But at the same time, we are also clearly aware that the current blockchain industry is still in the early stages of development, and there are many challenges in business models, talent training, technological innovation, and regulatory support. In order to improve the social awareness of blockchain technology and reduce the information gap between supply and demand between blockchain technology service providers and traditional enterprises, 01 Blockchain Zero One Think Tank will continue to launch the "Global Blockchain Innovation Application Case Report" , for readers. Secretary-General of the China Banking Association: Promote qualified institutions to access the bank letter confirmation blockchain service platform: March 6 news, in order to solve the problem of financial fraud caused by bank letter confirmation, the China Banking Association and China Register The Accountants Association has built a bank letter confirmation blockchain service platform. Liu Feng, deputy to the National People's Congress and secretary-general of the China Banking Association, said in an interview with a reporter from Shanghai Securities News today that the China Banking Association will promote qualified banking institutions to develop steadily and steadily in accordance with the principle of "one mature, one connected". Access to the platform in order to ensure the smooth development of the platform pilot work. [2021/3/6 18:21:15] This article is the first of the 01 Blockchain Global Blockchain Innovation Application Case Report. The case analyzed in this article is: an industrial financial service project based on blockchain. Initiated by the Bank of China, the project is mainly oriented to supply chain financial scenarios. Aiming at problems such as high banking business costs and financing difficulties for small, medium and micro enterprises in the financing process, it proposes to closely integrate blockchain technology with the supply chain to help small, medium and micro enterprises on the chain. Solutions for effective financing. On the one hand, the project can help banks reduce service costs and financing risks; on the other hand, it can break the business boundaries and information barriers of participants on the chain, improve financing efficiency, and optimize the financial ecology. At present, the project has been successfully applied. The first project takes the automobile supply chain as the basic scenario, providing Geely automobile suppliers with a full-process and fully online supply chain financial service system. Case Background Analysis Company/Team Introduction The blockchain-based industrial financial service project was launched by the Bank of China. It is one of the second batch of pilot projects supervised by the People's Bank of China for financial technology innovation. business. Site丨Gao Feng, Chief Information Officer of China Banking Association: The ecological integration of big data, blockchain, 5G and other technologies is conducive to the development of financial depth and breadth: Jinse Finance reported that at the Bund Conference held in Shanghai, the chief executive of the China Banking Association The information officer Gao Feng shared the theme "Ecological Bank Makes Finance More Inclusive" on the spot and pointed out that 5G has brought new opportunities for ecological banks, and 5G is mainly to provide the basis for technologies such as cloud computing, big data, and blockchain in mobile scenarios. The environment and the ecological integration of multiple technologies are conducive to the development of the depth and breadth of finance. Whether the scene can be made into an ecology depends on how deep it is, and how deep it is will be as wide as possible. [2020/9/26] In terms of blockchain practice, in 2015, the Bank of China began to base itself on traditional banking business, research blockchain technology and theoretical evolution, and analyze the application and application prospects of blockchain in the financial industry. In 2016, the Financial Technology Innovation Office of the Bank of China launched a systematic research on blockchain technology, and signed a strategic cooperation agreement with Beijing Aershan Financial Technology Company to explore the application of blockchain technology in the financial industry through the integration of "industry, education and research". The application of Bank of China has built the first cloud-based blockchain application platform of the Bank of China, and launched the Bank of China digital wallet system. At present, the Bank of China mainly applies blockchain technology to scenarios such as cross-border payment, trade settlement, e-wallet, digital bills, collateral valuation, public welfare poverty alleviation, and supply chain finance. According to 01 Blockchain's "China Blockchain Patent Report 2020", as of December 31, 2020, Bank of China has applied for a total of 55 blockchain patents. Sunline Technology was established in 2002 and listed on the Shenzhen Stock Exchange in 2012. It mainly provides financial technology application solutions for commercial banks and other financial institutions. The main products are divided into digital financial business solutions, big data application system solutions, and comprehensive value management solutions. solutions and innovative technical services based on products and solutions. The original customers of Sunlight Technology are Yantai Bank and Hengfeng Bank, and Tencent is its second largest shareholder, holding 6.66% of the shares. In terms of blockchain technology investment, at present, Sunlight Technology has established a project organization related to blockchain, and has carried out normal research and technical preparations for the central bank's digital currency. Former Bank of China President: Libra poses an unprecedented challenge to the existing monetary system: On the evening of May 5, Li Lihui, former President of the Bank of China and head of the blockchain research group of the China Internet Finance Association, said in a live broadcast on People's Network that Libra It poses an unprecedented challenge to the existing monetary system: transcending national sovereignty, central banks, and commercial banks. A super-sovereign digital currency has the potential to fundamentally restructure the global monetary system. To view the full content-zce of the speech, please click the original link. [2020/5/6] Target Scenario Analysis Blockchain-based industrial financial service projects are mainly used in supply chain financial scenarios. 1. Market analysis of supply chain finance Supply chain finance can help small, medium and micro enterprises solve financing problems, and has received strong support from national policies. In October 2017, the State Council issued the "Guiding Opinions on Actively Promoting Supply Chain Innovation and Application", and the development of supply chain finance has risen to the national policy level. Since then, the central bank, China Banking and Insurance Regulatory Commission and other institutions have introduced a series of policies to support the development of supply chain finance. In 2021, the "Government Work Report" mentioned for the first time the need to innovate the supply chain financial service model. According to the data from the Institute of Information and Communications Technology, from 2017 to 2020, the scale of China's supply chain financial market has maintained a steady growth, with a growth rate of around 4.5%-5%. In 2020, the market size will be about 1.5 billion yuan. At the same time, with the development of industrial chain, capital chain and digital technology, supply chain finance presents a trend of sceneization, digitization, credit, asset standardization and capital diversification. 2. Analysis of pain points in supply chain finance scenarios At present, supply chain finance mainly includes three modes: accounts receivable financing, inventory financing and prepayment financing, among which the core mode is accounts receivable financing. Traditional supply chain financial solutions have problems such as information asymmetry, inability to transfer credit of core enterprises, and low business efficiency: Voice | General Manager of China UnionPay Qingdao Branch: China UnionPay will continue to explore blockchain and other fields: According to Finance and Economics On July 7, at the 2019 China Fortune Forum with the theme of "Fortune Boosts Shipping, Trade and Financial Innovation", Chen Ting, general manager of China UnionPay Co., Ltd. Qingdao Branch, made a speech and said that China UnionPay, as an important financial The builders and operators of infrastructure, and the specific executors of the national strategy of China Mobile Payment, will continue to explore in the fields of cloud computing, artificial intelligence, blockchain, etc., and promote the forward-looking and technical layout of the next generation of mobile payment technology. Always pay attention to the innovation of global finance and currency, and actively participate in it. [2019/7/7] First, because the ERP systems between enterprises in the same supply chain are not interoperable, the information between enterprises is fragmented, and it is difficult to realize the intercommunication of information in the whole chain, which may lead to the risk of information fraud; second, the core Enterprises can only confirm the endorsement of first-tier suppliers, and it is difficult for the credit of core enterprises to be transmitted to all participants in the closed-loop supply chain. Its own system is immature and financial data is not perfect, which leads to financing difficulties for small, medium and micro enterprises; third, the current supply chain financial model is mainly based on the joint construction of platforms between banks and core enterprises, and excessive dependence on core enterprises will strengthen the bank's supply chain finance. Business hidden dangers, the strong bargaining power of core enterprises lead to high customer acquisition costs for banks, and at the same time, as the dominant position of core enterprises becomes prominent, the risk of fraud also increases. Blockchain-based industrial financial services establish a blockchain-based relationship network to realize the effective interaction of information between upstream and downstream enterprises, financial institutions, logistics, and governments in the supply chain, and solve the problems faced by participating institutions in supply chain financial services. Cooperation trust, data security, high financing costs and other issues, that is, to build a financial ecology that combines the "four streams" of supply chain business flow, logistics, information flow, and capital flow with information on-chain and detachable and refinancing digital credit certificates. Voice | Xiao Sa, director of the Bank of China Legal Research Association, said: There are certain difficulties in filing and claiming the OKex incident: According to Caixin, regarding the OKex incident, Xiao Sa, director of the Bank of China Legal Research Association, said: It is still uncertain Whether the founder of the virtual currency exchange was taken to the public security agency as a suspect or a witness to assist in the investigation, but in this incident, the latter possibility also exists. Generally, in cases involving virtual currency, the alleged crime may be the crime of fraud under Article 266 of the Criminal Law. However, since virtual currencies other than Bitcoin are only recognized as "data" rather than "commodities" in Chinese law, there are cases and claims. It must be difficult. If the case is reported as a crime of fraud, the criminal investigation is responsible for handling it; in practice, it may also be involved in the crime of illegal business operation, because ICO is an illegal public financing behavior, and providing assistance for ICO is also illegal or even criminal. In this case, no matter which country the main body of the virtual currency exchange is registered in, as long as it provides services to Chinese investors, the Chinese judiciary has jurisdiction. [2018/9/11] In terms of specific business model settings, the Bank of China has built a blockchain-based industrial financial service platform (hereinafter referred to as the "platform"). Users who use the platform (hereinafter referred to as "users") sign an agreement with Bank of China and issue a Bank of China E-certificate. The Bank of China E-certificate is used as the user's electronic credit certificate on the platform, which is used to record and prove the accounts receivable held by the holder of the electronic credit certificate with the issuer of the Bank of China E-certificate as the debtor. The number corresponds to a specific account receivable. Bank of China E-certificate can be transferred, split, and financed, and its transfer, split, and financing are the transfer, split, and financing of the corresponding accounts receivable. Figure 1: Blockchain-based industrial financial service business model Source: 01 Blockchain Take the first business of this project as an example. The first business was carried out around the scene of the automotive supply chain, and Geely and its upstream suppliers participated in the project as customers. Under the "Blockchain-Based Industrial Financial Services" project, Geely Automobile provides certification for suppliers, and uploads information such as transaction data, logistics data, tax invoices, contracts and settlement documents between supply chain enterprises to the blockchain to realize basic transaction information. cross-validation and prevent information tampering. During the financing process, the bank provides financing support for the suppliers on the chain according to the relevant transaction information provided by Geely Automobile. Utilizing the transferable, detachable, and financing features of Bank of China E-certificates, suppliers can split a single claim and choose financing or transfer as needed. In this mode, since the debtor of the digital credit certificate is the core enterprise, The credit of core enterprises can penetrate to second-tier and third-tier suppliers, thereby helping second-tier and third-tier suppliers to obtain financing quickly. The blockchain-based industrial financial service system can provide functions such as enterprise registration approval, issuance and receipt of digital credit certificates, dismantling, financing, and related approval processes. The system adopts the deployment method of private cloud server to ensure that customer data can be internally managed by the Bank of China, and uses cryptographic algorithms to encrypt and protect transaction data information, and key data information is stored in ciphertext. At the same time, the system has built a monitoring and alarm system for the blockchain network nodes and upper-layer applications, which can detect and report abnormal problems during the system operation in a timely manner, and has formulated emergency plans to ensure that the system can be resolved in time if any problems occur. From the perspective of the entire project design, the blockchain-based industrial financial service has set up a risk prevention and control mechanism and a complaint response mechanism on the basis of technological innovation. While formulating business risk management, internal control and compliance management, and data security management, a risk compensation mechanism, exit mechanism, and emergency plan were formulated to detect and prevent risks in a timely manner; secondly, in order to facilitate customers to solve problems quickly and directly, the project A complaint resolution mechanism including institutional complaints and self-discipline complaints has been designed. From the perspective of technological innovation, the project realizes high-speed information exchange between upstream, midstream and downstream enterprises, financial institutions, logistics, and the government in the supply chain by establishing a relationship network based on blockchain mutual trust, and solves the problems of participating institutions in supply chain financial services. In terms of cooperation trust, data security and other issues; relying on big data and artificial intelligence technology, financial institutions can quickly make financial service decisions, solving the financing difficulties and expensive financing problems of traditional small, medium and micro enterprises; using zero-knowledge proof and other technologies to improve the foundation The speed of business verification enhances the protection of private information of enterprises and improves the trust between enterprises. The application value of this project is mainly reflected in four aspects: First, realize the data management of supply chain business flow, information flow, logistics, and capital flow, open up multi-party data islands, gather upstream and downstream data information of the industrial chain, and be able to establish a supply chain Enterprise integrity system; second, it can provide financial services for small, medium and micro enterprises including digital credit certificates that can be dismantled and refinanced, working capital loans, accounts receivable financing and other scenarios; third, use the traceability of blockchain The nature and the relatively closed-loop characteristics of the supply chain can realize the penetrating supervision of related business products and corporate behavior, and promote the orderly and healthy development of the industrial ecology; fourth, it can realize the integrated application of online and offline loan business, involving Credit loan, mortgage loan and other loan forms.


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