Trade Finance

Blockchain Solution for Supply Chain Finance from Mahindra and IBM

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Indian-based company Mahindra Group and IBM have announced the development of a blockchain solution to transform supply chain finance across India by enhancing security, transparency and operational processes.

The cloud-based application is designed to utilise a permissioned distributed ledger to enable supplier-to-manufacturer trade finance transactions. This blockchain-based supply chain finance solution will enable all parties involved in the transaction to act on the same shared ledger, with each party updating only their part of the process to increase efficiency, consistency, trust and transparency, whilst safeguarding sensitive information.

Invoice discounting – bundling and selling invoices at a discount – is a large source of working capital finance for many suppliers. This new solution aims to enable more suppliers to access credit, with the goal of increasing financial inclusion throughout the supply chain. Supplier-to-manufacturer invoice discounting processes have been described as difficult, slow and risky, requiring each party to maintain and manually update separate ledgers. Human errors during this process can create inconsistent records, ultimately resulting in delayed payments and capital that cannot be accessed.

Anish Shah, Group President of Strategy at Mahindra Group, commented: “The Mahindra Group is pioneering the use of blockchain to disrupt its traditional businesses and drive future growth. We are actively looking at other applications across the Group in financial services, auto, mobility and agritech. This proof of concept represents a significant step forward in making blockchain, still a new technology, a more compelling and efficient supply chain solution for Mahindra Finance’s small and mid-sized enterprises loans business. Working with IBM, we will work to build, test, scale and refine this solution over time.”

Blockchain technology can help enable Mahindra Finance access transactions recorded on a shared ledger almost instantaneously, enabling it to develop and offer new products to small and mid-sized enterprises and helping to drive business growth into the future.

Managing Partner of IBM Global Business Services, IBM ISA, Lula Mohanty remarked: “Blockchain is poised to revolutionize business like the Internet did, and IBM is at the forefront of the revolution. We offer a comprehensive enterprise-class blockchain solution that is secure, scalable and reliable. The work with Mahindra has the potential to fundamentally transform the way businesses interact with one another and their customers and suppliers, and we’re confident that this engagement can be replicated not just in the finance industry but across other sectors as well,”

IBM is expanding its blockchain consulting services and capabilities and actively working with clients in order to develop blockchain technology for business. Through its open source contributions to the Hyperledger Fabric and its blockchain services on IBM Bluemix cloud, developers can develop applications while testing security, availability and performance of a permissioned blockchain network. IBM is working to progress areas such as financial services, supply chains, trade finance and logistics, IoT, risk management, digital rights management and healthcare by using blockchain networks.

Matthew Warner
Based near Windsor, England, Matthew Warner is an enthusiast for innovative, cutting edge technologies. He is a B.Eng. graduate in engineering with honors from the University of Warwick and also holds an PGCE in education degree. Matthew is a member of Mensa.