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The six major banks have invested nearly 100 billion in financial technology.How far can supply chain finance go under the blockchain?



"21st Century Business Herald" news: The release of the 2020 bank annual reports has come to an end. The previous annual reports of the six major banks have been released. All nine A-share listed banks have disclosed their 2020 operating performance. It is not difficult to find from the annual report that "supply chain finance" is a business sector that each bank vigorously deploys and focuses on at the same time. Looking back at the history, since 2015 in the domestic market, the concept of supply chain finance has become popular, and various institutions have entered the market, and the business has grown by leaps and bounds. The market is optimistic about the prospects of supply chain finance. After all, in 2018, the national accounts receivable financing demand exceeded 13 trillion yuan, of which only 1 trillion yuan was met, and major banks mainly serve super-large core enterprises. The first-tier upstream suppliers, while the small and micro enterprises at the long end of the supply chain have a financing gap of nearly 12 trillion yuan, and the prospect is obvious. However, judging from the actual development status of the market, there are still many pain points that need to be solved in supply chain finance. Compared with the expected market gap, the growth of the products, capabilities and financing willingness of financial institutions to provide services does not seem to be as expected. Even in 2019, there were many "thunderstorms" incidents in supply chain finance, which triggered a series of risk reflections in the market. However, with the development of financial technology, banks have increased their investment in financial technology in recent years. According to the data in the 2020 annual report, the scale of investment in technology by the six major state-owned banks is about 95.6 billion yuan, and the investment in technology by the six joint-stock banks that have disclosed relevant data has also exceeded Among them, the R&D and application of cutting-edge technologies such as artificial intelligence, blockchain, cloud computing, big data, and the Internet of Things are the main focus, and the increase of these technologies, especially the rapid application of blockchain in recent years, is Bring new possibilities to the business of supply chain finance. Dynamics | Six Highlights of the Key Laboratory of Blockchain Technology and Data Security Ministry of Industry and Information Technology in 2019: January 11th, hosted by the National Industrial Information Security Development Research Center, Blockchain Technology and Data Security Industry and Information Technology The work exchange meeting undertaken by the key laboratory of the ministry was held in Beijing. He Xiaolong, deputy director of the National Industrial Information Security Development Research Center and director of the key laboratory, made a report titled "Joint Progress, Promoting the Innovation and Development of Blockchain Technology and Industry", focusing on the six highlights of the laboratory's work in 2019: One is to gather industry resources and innovate the laboratory management model; the other is to strengthen basic technology research and provide technical support for industrial applications; the third is to empower industrial transformation and promote the integration and application of blockchain; Participate in the construction of the "Tianping Chain"; Fifth, build a national-level data security platform based on independent innovation of the underlying technology; Sixth, explore the talent training mechanism and strengthen the construction of talent reserves. In the next step, the laboratory will continue to focus on the key technology research of the blockchain and promote the application of technology integration; adhere to application-driven, expand the field of industry research; establish a security system to promote the safe and orderly development of the blockchain; promote integrated innovation and build block chains chain industry ecology. [2020/1/11] Although the concept of blockchain is in full swing, and finance is regarded as the easiest and most valuable field to be applied, in the opinion of many industry insiders, the application of blockchain technology in the financial field is It is a thing with high intentions, difficult implementation, and limited scope of action. However, the 21st Century Business Herald reporter learned in the interview that because blockchain technology can effectively help solve cross-regional, cross-institutional, and cross-system trust issues, this matches the pain points in supply chain finance. Enterprises in the supply chain are often distributed in different regions, involve many institutions, business systems are not connected, and there are data islands, and the blockchain is a good solution to this problem of distrust between institutions. Voice | KPMG: The institutionalization of encrypted assets faces six major challenges: According to btcmanager, a report released by KPMG, one of the Big Four accounting firms, shows that encrypted assets have been established as an asset class for institutional investors. At the same time, the institutionalization of encrypted assets also faces challenges. There are still many hurdles to overcome before blockchain-based digital assets become a financial product for all investors. The report summarizes six major challenges, namely regulatory compliance, fork management and governance, KYC and encryption management, secure encryption, accounting and financial reporting, and tax implications. [2018/11/26] In addition, the blockchain can also help transfer trust, financing for small and medium-sized enterprises at the end of the industrial chain, making credit in the business system traceable and transferable, and filling the gap between financial institutions and small and medium-sized enterprises. gap in trust. Thereby lowering the financing threshold for SMEs. It provides financing opportunities for SMEs and reduces their cost of capital. Third, blockchain technology is conducive to reducing internal control risks. Use distributed node consensus algorithms to generate and update data, use cryptography to ensure the security of data transmission and access, and combine smart contracts composed of automated script codes to automatically clear and settle funds to help reduce internal control risks.  As a result, blockchain + supply chain has become the most popular landing scenario in the financial field. From the perspective of banks, China Zheshang Bank was the first to eat crabs, which made China Zheshang Bank quickly become famous in the field of supply chain finance.  In August 2017, Zheshang Bank launched the receivables chain platform based on the blockchain platform, realizing the integration of blockchain and supply chain finance for the first time. According to reports, the blockchain receivables issued by the core enterprises can be circulated in the supply chain business circle, and the downstream starts from the issuance and acceptance of the blockchain receivables, and seamlessly embeds the capital flow in the transaction process. After the upstream receives it, it can be transferred to the bank online in real time to obtain funds, no longer troubled by the account period, and realize "no funds" transactions in the circle, thereby reducing the demand for external funds and building a healthier supply chain ecology. Small and medium-sized enterprises receive "blockchain receivables", which can not only be used for external payments, but also can be transferred to banks for financing and realization at any time. Voice | Mayor of Yuzhong District, Chongqing: Vigorously develop six major digital industries including blockchain to form new economic growth points: Shang Kui, Mayor of Yuzhong District, Chongqing, said that Yuzhong District will vigorously develop big data applications, blockchain, digital content, and software Service, industrial Internet, integrated circuit design and other six major digital industries, cultivate core business forms, related business forms and derivative business forms of big data intelligence, and form new economic growth points. [2018/8/10] A former Zheshang Bank employee told the reporter of 21st Century Business Herald that the key reason why this model has received good market response once it was launched is to convert corporate accounts receivable into electronic payment settlement and financing tools. The platform can handle the issuance, acceptance, confirmation, payment, transfer, pledge, redemption and other businesses of blockchain receivables. Moreover, Zheshang Bank integrates Yongjin asset pool, Yiqiyin platform, and receivables chain platform to help enterprises build their own financial platforms. The provision of liquidity services, virtual financial companies, leasing, factoring, supply chain finance, direct bank-enterprise connections, etc., has truly revitalized accounts receivable. According to the statement about supply chain finance in Zheshang Bank's 2020 annual report, supply chain finance has achieved rapid development through this Internet + entity enterprise + financial service model. Its receivables chain platform relies on the latest financial technology such as blockchain, and innovatively develops an enterprise-banking business cooperation platform to provide corporate customers with the issuance, acceptance, confirmation, repayment, transfer, pledge, and payment of blockchain receivables. As of the end of the reporting period, it has served 27,969 customers and provided a financing balance of 193.930 billion yuan, an increase of 101.78% from the beginning of the year. Voice | There are six major trends in the development of blockchain: At the "World Blockchain Conference Wuzhen" branch venue, Yu Jianing, director of the Institute of Industrial Economics of the Ministry of Industry and Information Technology, pointed out that the development of blockchain has the following six major trends: 1. Blockchain has become the forefront of global technology development and opened up a new track for international competition; 2. The blockchain field has become a new hot spot for innovation and entrepreneurship, and technology integration will expand new application space; 3. Blockchain will be used in the real economy in the next three years It has been widely implemented and has become an important support for the construction of digital China; 4. The blockchain creates a new platform economy and opens a new era of sharing economy; 5. The blockchain accelerates the process of "credible digitalization" and drives financial service entities to "get rid of the virtual and turn to the real" Economy; 6. The blockchain supervision and standard system will be further improved, and the foundation for industrial development will continue to be consolidated. [2018/6/30] A person in the supply chain finance industry told the 21st Century Business Herald reporter that the supply chain + block chain can significantly reduce financing costs while realizing credit transmission, because it allows banks to reach the long tail The possibilities have grown. In the traditional scenario, because the credit of the core enterprise cannot be transferred, the bank can only face the first-tier suppliers, and cannot find high-quality customers among the multi-tier suppliers, and the business profit margin is extremely limited. Multi-level suppliers, especially small, medium and micro enterprises, cannot obtain bank credit for their financing demands, and most of them need to meet their capital needs through private loans. Common loan interest rates reach 15%-20%, and even some loans have annualized interest rates exceeding 24%. In the blockchain+supply chain financial platform, due to the realization of the transfer of core enterprise credit and the use of core enterprise credit as the basis for loan financing, the loan financing interest rates of suppliers at all levels have declined. If the financing cost of small and medium-sized suppliers originally had an annualized interest rate of 18%, it is now reduced to about 10% or even lower, and the financing cost is reduced by more than 40%.  The sixth largest bitcoin wallet has more than 80,000 bitcoins: According to cryptovest, a "HODL" bitcoin wallet has transferred 93,947 bitcoins since March 25, 2018. The address of the wallet is 1KAt6STtisWMMVo5XGdos9P7DBNNsFfjx7 currently owns 85,947 bitcoins and sold 8,000 bitcoins. According to relevant data, this account has now become the sixth largest wallet in the Bitcoin network, and the top five wallets are all owned by exchanges. [2018/6/7] As far as banks are concerned, due to the penetration of credit, banks can face multi-level suppliers and rely on the credit of core enterprises, especially for loans to small, medium and micro enterprises, and the loan interest rate is also correspondingly higher than that of the original first-tier suppliers. The loan interest rate is high, the profit margin is larger, and the customer base has also increased significantly.  For core enterprises, after using blockchain supply chain financial services, the capital cost of the entire industrial chain will be reduced, which will also enhance the competitiveness of the entire industrial chain, and transmission to core enterprises will also enhance the competitiveness of core enterprise products. In addition, core enterprises can also use idle credit or funds to provide services to obtain additional income and strengthen the control of upstream and downstream. But does this mean that the application of financial technology such as blockchain is a panacea for supply chain finance? During the interview with the 21st Century Business Herald reporter, it was found that there are also many voices of doubt in the market. Its core logic is that the reason for the limited development of supply chain finance lies in credit, and the role that blockchain technology can play in the identification and control of credit is limited.  A senior person in the supply chain financial business told the 21st Century Business Herald reporter that within a certain limit, the blockchain can play a role in identifying credit risks and reducing internal control risks in the risk control link of supply chain finance, and it may also generate improvements. Negative effects of concentration risk. Although blockchain technology does not provide a complete financial risk solution, it is still a valuable new auxiliary tool for risk management. More importantly, although the role of the blockchain in providing data is unquestionable, there are prerequisites for this. For example, the data source must be credible, and the data process after entering the chain must be credible. As far as the current core enterprise accounts receivable financing is concerned, the essence is whether the core enterprise's data and the core enterprise's credit can be trusted. This leads to the second question: Taking the core enterprise receivables model as an example, the blockchain application only describes the future expected cash flow of the supplier at the data level, but does not guarantee the realization of this contingent cash flow. However, there is no guarantee that the repayment credit will be realized.   He further pointed out that especially as the default rate of core enterprises has risen in recent years, financial institutions such as banks and factoring companies have suffered losses as a result. In addition, if there is an over-reliance on core corporate credit, there may be a problem of excessive risk concentration of a single repayment source. There are several well-known factoring companies in the industry, because the business scale of some core enterprises and listed companies is too large, and bad debts soared when there is a problem. The person believes that, from the perspective of risk level, the risks solved by blockchain technology are the lower level of risks in the financial field, and the high-level risks that have greater influence and more serious consequences require more attention and management. In terms of high-level risks, the blockchain is actually powerless. Another person in the corporate business of a joint stock company bluntly said that he is optimistic about the overall supply chain finance in the long term, but not so optimistic in the short term. The reason for the long-term optimism comes from the progress of information technology, the development of enterprises, and the reform of financial institutions. The digitization process of finance and enterprises is irreversible. Enterprises hope that information digitization can improve production and operation efficiency, and financial institutions hope to penetrate enterprise operations and better assess risks. The demands of the two are consistent. With the deepening of the digitalization process and the acceptance of digital risk control by financial institutions, supply chain finance will inevitably develop by leaps and bounds in the future. He further pointed out that in the short term, financial institutions are currently in an awkward position in supply chain finance, mainly due to several reasons. First, compared to standard products such as mortgage loans and credit loans, supply chain finance is a non-standard product. It is a niche product in terms of scale and total volume, and still requires a lot of innovation and research and development. From the perspective of input and output, most financial Institutions are actually more willing to do standard product business. Second, supply chain finance has higher requirements for financial institutions. Since the supply chain products corresponding to different industries and scenarios are completely different, the industry professional requirements, approval risk control and other aspects of financial institution practitioners are higher. Front-line business personnel in financial institutions do not have this capability. The third is that limited by supply chain finance’s unique constraints such as single amount, price, efficiency, and insufficient data dimensions, there are still many restrictions on the specific batch and large-scale landing business of financial institutions. Fourth, factors such as the performance appraisal mechanism of traditional financial institutions such as banks, the mechanism of head office and branch, and risk preference have also inhibited the subjective initiative of banks to develop supply chain finance. However, the person also pointed out that in recent years, some financial institutions that have not been particularly prominent in the ranking of comprehensive strength, but have a sense of innovation and technological strength, are trying to deploy and develop supply chain finance. For example, the accounts receivable chain platform of China Zheshang Bank, E-communication of China Construction Bank, and Ping An Haolian of Ping An Bank have all developed some models and characteristics.   China Construction Bank disclosed in its 2020 annual report that in 2020, it has provided a total of 562.659 billion yuan in online supply chain financing support for 65,500 chain companies in 3,693 industrial chains. It is the only bank among the six major banks that discloses the specific supply chain financial scale, and the scale is also the largest among the disclosed banks.


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