Mahindra and IBM to develop blockchain solution for supply chain finance
Both the firms claim that blockchain solution has the potential to reinvent supply chain finance by enhancing security, transparency and operational processes
Latest News »
- Bharti Infratel Q1 consolidated profit falls 12%
- World oil demand could peak in 2024 on higher vehicle efficiency: Goldman Sachs report
- After five decades in politics, President Pranab Mukherjee says ‘Nomoshkar’ to private life
- Opposition boycotts UP Assembly, holds parallel ‘House’
- IT start-up employees are entitled to labour law benefits, says government
Mumbai: The Mahindra Group and International Business Machines Corp. (IBM) will co-develop a blockchain solution, which the companies claim, has the potential to reinvent supply chain finance across India by enhancing security, transparency and operational processes.
This cloud-based application, one of the first projects of its kind in India outside of traditional banking, is designed to transform supplier-to-manufacturer trade finance transactions, Mahindra said in a statement.
The 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 its part of the process, ensuring efficiency, consistency, trust and transparency, while safeguarding sensitive information.
Invoice discounting, the process of bundling and selling invoices at a discount, is a major source of working capital finance for many suppliers. This new solution aims to enable more suppliers to access credit, with the goal of driving more financial inclusion throughout the supply chain. The solution aims to simplify supplier-to-manufacturer invoice discounting processes that have historically been difficult, slow and risky, requiring each party to maintain and manually update separate ledgers.
Anish Shah, group president (strategy), Mahindra Group, said the group is pioneering the use of blockchain to disrupt its traditional businesses and drive future growth.
The company is also 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,” said Shah.
Blockchain technology can help enable Mahindra Finance access transactions recorded on a shared ledger in near real-time, enabling it to develop and offer new products to small and mid-sized enterprises. This is a radical process and technology shift which has the potential to drive business growth into the future.
“Blockchain is poised to revolutionize business like the Internet did,” said Lula Mohanty, managing partner of IBM Global Business Services.
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,” he said.
In an interview with Mint in June 2016, Shah said Mahindra is sharpening its focus on digital technologies such as blockchain, Big Data analytics, the Internet of Things (IoT), and even augmented reality (AR) and virtual reality (VR), to boost growth.