IBM and Mahindra team up to develop blockchain supply chain finance solutions in India

Rage Review : IBM and Indian business group and multinational Mahindra have developed a cloud-based blockchain solution that makes financial transactions from suppliers to manufacturers possible through a licensed blockchain. This can be a blockchain solution for small and medium-sized enterprises in India, which can not only simplify business transaction processes, but also reduce risks and errors. India's Mahindra Group has seen the potential of blockchain technology and hopes to bring more attractive and efficient supply chain solutions to Indian small and medium-sized enterprises by joining forces with technology giant IBM.

Translation: Nicole

Technology giant IBM has announced a partnership with Indian conglomerate and multinational Mahindra to develop blockchain solutions to revolutionize supply chain finance in the country.

The two companies aim to develop a cloud-based solution - a marked departure from existing traditional banking protocols in India - to enable trade finance transactions from suppliers to manufacturers over a permissioned blockchain.

Market observers and researchers studying blockchain applications in the financial industry often point to trade finance as an area that could be disrupted by blockchain. If successful, blockchain solutions for Indian SMEs could simplify and secure business transactions in innovative ways while reducing risk and errors.

Announced today, the IBM-Mahindra blockchain solution will essentially allow all parties involved in supply chain finance to act on a single shared ledger. Suppliers and manufacturers will update every part of their transaction process to ensure complete transactions are facilitated while increasing efficiency and transparency.

IBM elaborated on the example of invoice discounting, a common practice in India where finance companies lend money by recording unpaid settlements that companies receive from customers as collateral. Traditionally, this is a cumbersome process, and fees can be paid late or not at all, and is often prone to errors because different parties keep separate, often inconsistent ledgers. On a blockchain, however, when transactions and data are recorded on a shared ledger, suppliers can get credit and capital from financing.

A direct beneficiary of the blockchain platform developed by IBM is Mahindra Finance, the company’s financial arm that serves people conducting day-to-day business in India.

Anish Shah

Anish Shah, President of Strategy at Mahindra Group, said in the statement:

“This proof of concept represents a significant step forward for blockchain, while still a new technology, to enable a more attractive and efficient supply chain solution for Mahindra Finance’s SME lending business.”

The executive also said Mahindra is looking for blockchain solutions in the automotive and agricultural industries, in addition to the financial sector — the company is a large car and tractor manufacturer and exports its vehicles around the world.

Lula Mohanty

Lula Mohanty, managing partner at IBM Global Business Services, added:

“Blockchain is poised to revolutionize businesses like the internet, and IBM is at the forefront of that revolution...This collaboration with Mahindra has the potential to fundamentally change the way businesses interact with their customers and suppliers, and we believe this engagement can be replicated not only in the financial sector, but in other industries as well.”