Guangdong has launched an innovative new SME financing and regulatory system built on blockchain technology, in which companies may register their assets, liabilities and transactions in real time with a wide range of government departments and, in return, gain easier access to credit from banks and other financial institutions.
“Guangdong’s battle against financial risks has been strengthened as powerful weapons have been added,” Li Tengfei, deputy director of the Guangdong Local Financial Supervision and Administration Bureau, was quoted as saying by local media.
According to Liang Jinchang, assistant general manager of Guangzhou Financial Risk Monitoring and Control Center, the system is an innovative joint application of blockchain technology, fintech, and regulatory technology. It synchronizes core financial information such as funds, assets, and transactions of financial institutions in real time. This allows regulators to receive early warning risk alerts when firms run into financial difficulty. It will also strengthen the government’s ability to protect the rights and interests of investors, reduce the occurrence of conflicts and disputes, and maintain local financial stability, he said.
The system still has much room to grow, Liang said, and in the future, it will fully cover all kinds of local finance firms, ranging from small loan companies, financing guarantee companies, regional equity markets, pawn shops, and financial leasing companies, to professional farmers’ cooperatives conducting mutual credit assistance, and social crowdfunding institutions.
The system is part of a much larger platform that was unveiled last week, which is designed to get better financing to Guangdong’s army of Small and Medium Enterprises (SMEs) – particularly its 45,000 National-Level High-Technology Companies. It is apparently underpinned by technology from OneConnect, the Ping An Group subsidiary that recently listed in New York.
As reported by Sina Finance, the new platform creates credit ratings for businesses based on their financial and administrative information via a blockchain network of 26 government agencies, including the State Administration for Industry and Commerce.
The key part of the platform is that it enables small firms, without much in the way of physical property, to use soft assets, such as intellectual property and export-import trading records to apply for funds from commercial banks. It can also match companies with 319 financial products depending on their need.
It has apparently collected information from more than 11 million companies, and has processed three transactions between local technology startups and commercial banks.