Factorin, a Moscow-based fintech start-up, has launched a blockchain-powered supply chain and trade finance platform, following a six-month pilot.
The company “a fast growing and revenue generating business that seeks to partly address the estimated US$45 billion gap of trade finance for small- and medium-sized businesses in Russia,” says that the distributed platform is based on a private version of Ethereum blockchain technology, and is made up of around 20 nodes, located within participants’ servers
“Each of the large players has their own nodes, and these nodes are within their IT perimeter of security, and integrated into their systems,” Factorin’s co-founder, Andrei Maklin, told Global Trade Review.
“That includes the warehousing systems, the logistics systems, customer relationship management (CRM), enterprise resource planning (ERP), and document management systems. The data is kept at the node, but we connect the systems of the various players so that they can communicate with each other without human intervention.”
Maklin says the system offers invoice discounting capabilities, via a series of automatically-generated, legally-binding documents. “When the supplier delivers the goods, as soon as the goods are scanned into a system which is integrated to the node, we generate all the supporting documents that are needed on behalf of the buyer.
“The system allows us to prepare different sets depending on the requirements of the banks or other participants. These documents are automatically signed and replicated on the nodes of the intended participants of the deal.” Maklin adds that the data is replicated only on the nodes of participants, and that Factorin as a platform does not have access.
A supplier can then select which invoices they wish to access finance for via mobile app. Suppliers on the platform are guaranteed to receive financing within 24 hours, providing valuable working capital for small businesses.
The digital signature on the documents is legally binding under Russian law. As the documents are signed automatically, human intervention required is limited to occasional checks and verifications.
Eyes on Europe
GTR reports that the system has been in testing since mid-December and has processed approximately 12,000 transactions to date. It now has13 banks among its participants, and Russian grocery chain Dixy has already gone live on the system, with suppliers receiving payments within one business day instead of two weeks.
The digital signature on the documents is legally binding under Russian law, and given that the documents are signed automatically, the only human intervention required is for occasional checks and verifications.
Maklin said earlier this year that Factorin now plans to expand geographically with its European partners and also to introduce additional financial instruments to the platform. He adds that its system of digital signatures is also legally valid in Europe, and the only localisation work required will be adding further languages to the mobile app and platform, currently restricted to Russian and English.
GTR reports that Factorin has already held meetings with several banks and lenders in the region and aims to incorporate a new EU entity by this autumn.
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