Community Blog Ant Blockchain in Finance: Helping Small Businesses Obtain Funds through Microfinance

Ant Blockchain in Finance: Helping Small Businesses Obtain Funds through Microfinance

This post discusses how Alibaba Cloud and Ant Financial are empowering SMEs through "microfinance" with blockchain.

"Traditional financial services can provide financing for about 15% of micro, small, and medium enterprises in the supply chain. With blockchain technology, 85% of suppliers can enjoy convenient financing," as quoted by Jiang Guofei, Vice President of Ant Financial. This data reflects Ant Blockchain's mission in the finance field, which is to level the financial playing field to give more opportunities to micro and small enterprises.

Ant Blockchain has the answer. Based on blockchain services, the time it takes for a small or micro enterprise to obtain financing has been reduced from 3 months to just 1 second. After a three-minute application process, your funds are issued in just one second, with no manual intervention required. Blockchain is reshaping microfinancing. Based on the trust formed by the blockchain, small and micro enterprises can seamlessly connect with financial services to enjoy ever-more secure, convenient, and inclusive financial services.

The following case studies show how Ant Blockchain operates in the microfinance field.

Supply Chain Finance

Accessible Bank Financing for Small Stall Owners


A Chengdu market stall, "Guanyong Specialty Store" with registered capital of only RMB 30 was the first business to receive financing from Ant Double Chain, in partnership with its upstream enterprise Zhongke Daqi. This loan was guaranteed by Chengdu SME Credit Guarantee Co., Ltd. Prior to this, data showed that 98.5% of supply chain financing needs had not been met.

Ant Double Chain is the product that Ant Blockchain is using to enter supply chain finance. Based on the accounts payable of core enterprises and the real trade among different participants in the industrial chain, the credit of core enterprises can be transferred level by level through the blockchain. This solves the financing difficulties of small and micro enterprises up and down the supply chain. For example, Guanyong Specialty Store obtained payment commitments from distant parties based on credit circulation in the supply chain. However, the original three-month payment period has been done away with, so they were able to obtain a loan worth RMB 20,000 in just one second.

Ant Double Chain has achieved remarkable results, covering thousands of small and micro enterprises and providing hundreds of millions of RMB in financing.

Blockchain Warehouse E-tickets

A Breakthrough in Pledge Financing for High-frequency Trading


At the end of October, Eternal Asia, working with Ant Financial and Zhongrong Trust, released China's first blockchain-based mobile asset financing project for the fast-moving consumer goods (FMCG) industry. The total project funding was RMB 250 million, and it launched with RMB 50 million. Before that, Eternal Asia Yusheng Financial Technology launched the N++ blockchain "Miaoya" platform based on Ant Blockchain's IoT financial chain. The mobile asset financing project for the FMCG industry was launched through this platform.

Due to the frequency, speed, and complexity of the FMCG industry and problems such as repeated pledges, frequent enterprise changes, frequent changes to lists of pledged goods, concerns about the authenticity of pledged goods, and ownership, pledge financing in high-frequency transaction scenarios has always been a "no man's land" in the financial field. Unlike merchant credit financing, each warehouse receipt issued in the Ant IoT financial chain is anchored to a unique physical asset, ensuring the authenticity of the physical assets that underly warehouse receipt financing. In addition, the 24-hour monitoring of the anchor collateral establishes objective credit for the pledged assets. The innovative application of blockchain in warehouse receipt financing has opened a new channel by which a large number of small and micro channel enterprises can obtain financing. This provides financial institutions with batches of high-quality controllable assets. It also represents an attempt to use blockchain to serve the real economy of the supply chain.

Cross-border Remittances

Promoting Financing across the Belt and Road Initiative


In addition to the rapid development of mobile payments, blockchain-based cross-border remittance services have promoted the globalization of small and micro enterprises and financing across the Belt and Road Initiative. Alipay is working with governments and foreign banks to implement blockchain technology. In just the past year, these efforts have led to outstanding results.

In June 2018, the world's first blockchain-based cross-border wallet remittance service was launched in Hong Kong SAR. Hong Kong e-wallet users can now use blockchain technology to remit money to e-wallet accounts in Philippines and receive their funds in real time. Six months later, the blockchain cross-border remittance project was extended to cover remittances from Malaysia to Pakistan. Currently, our system allows Filipino and Pakistani citizens who work abroad to send money back home faster and more securely.

With the help of blockchain technology, Ant Financial's cross-border remittance system provides fast, secure, convenient, low-cost, and transparent services. Through the automatic execution of smart blockchain contracts, we have lowered the operation, compliance, and reconciliation costs of financial institutions and improved the operating efficiency of funds. This allows us to offer superior cost savings.

Small and micro enterprises at the end of the industrial chain are trapped by financial pressure from producers and lack the ability to fight for their interests. Blockchain is the key that can set them free. Ant Blockchain is constantly exploring new blockchain application scenarios in the microfinance field and providing more opportunities for small and micro enterprises to benefit from inclusive finance.

Download the Big Data and Blockchain: Innovative Fintech in the Cloud whitepaper to learn about Alibaba Cloud's technological innovation in financial services and how it is driving transformation in the Fintech sector.

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