DBS Bank has announced its first multi-tier financing facility on a logistics blockchain platform named Rong-E Lian, to help small and medium-sized enterprises (SMEs) in China get faster access to trade financing. 

Developed in partnership with a Chinese logistics player, Rong-E Lian offers multi-tier financing solutions to more than 1,000 of suppliers in the company’s supply chain ecosystem. The multi-tier financing solution is particularly beneficial to suppliers embedded beyond the first layer of the logistics supply chain ecosystem, as they include SMEs which may have limited access to trade financing due to their lack of scale or credit history.

Leveraging on DBS’ Application Programming Interface (APIs), the bank integrated its digital onboarding service into the blockchain platform, allowing DBS to verify the credentials of a supplier within seconds. Once credentials are verified, the bank is then able to offer digital trade financing services to upstream suppliers, often SMEs, in the ecosystem within 24 hours.

Neil Ge, CEO of DBS China, said: “Cash flow is critical to the sustainability of any business, but even more so for SMEs. However, more than half of SMEs globally tend to face rejection by financial institutions for their trade finance needs, contributing to the world’s trade finance gap of US$1.3 trillion. By using new technologies such as blockchain and APIs, we hope to democratise trade finance by providing SMEs more affordable and convenient access to bank credit to enable them to realise their business ambitions, serve their customers well and expand into new markets with ease.”

DBS has successfully completed its first multi-tier financing transaction on the Rong-E Lian blockchain platform with suppliers in the China-based logistics supply chain ecosystem in August. This comes on the back of the bank’s other efforts to explore initiatives to deepen and broaden its partnership with businesses in the Greater Bay Area region. For instance, DBS was the first foreign bank to digitalise cross-border settlements with a one-stop digital payments and collections solution called DigiDocs in July. In addition, DigiDocs also offers the online booking of foreign exchange rates, allowing DBS customers to select their preferred exchange rate according to market real-time quotes for remittance payments.

Ginger Cheng, head of Large and Mid-cap Corporates, Institutional Banking Group, DBS China said, “DBS believes in the huge growth potential in the Greater Bay Area, also known for being the ‘Silicon Valley of the East’. This is a groundbreaking transaction for DBS in China as we use digital technologies to develop new business models with our corporate clients. As part of our digital transformation strategy, we integrated financial services into the blockchain platform to develop a new business model and better serve upstream suppliers. As such, we are able to provide integrated trade financing, giving suppliers easy access to financing on the go. This is especially beneficial to SMEs as they are offered credit on better terms. We look forward to collaborating with more companies to co-create innovative digital client solutions for supply chains in China.”