Small and medium enterprises to be benefited by blockchain

Udit Sharma, Business Account Executive for IBM Global Services and Juan Delacruz, Transformation Executive at IBM Global Government Industry conveyed insight on 08 May about how blockchain could help increase access to credit for enterprises.

The duo noted that small and medium enterprises (SMEs) often fuel the economy by generating new jobs. Access to credit is very important for such businesses. Developing economies are ideal to stand benefited from such endeavors. Udit and Juan expressed that almost three-quarters of the SMEs are financially constrained. Countries with robust legal and institutional infrastructure experience high credit access and faster economic growth.

Udit and Juan added on the importance of an efficient collateral registry. They emphasized the need for a trusted, movable asset collateral registry. Such registries include agriculture equipment, inventory, and accounts receivables. Such measures would foster increased access to credit in newly industrialized countries. The duo highlighted that lenders are willing to provide more credit when there is confidence in a country’s collateral registry.

The duo cited the novelty of blockchain as –

“With a collateral platform based on blockchain, the entire process can be streamlined. The lenders and intermediaries will act as the node(s) and the integrity of the lender’s loan registry, at the secured asset level can be ensured, with the legal claim placed on the secured collateral. Such a platform will also have the ability to provide near real-time notifications, improving the monitoring capabilities and thereby prevent many of the creditor concerns highlighted before.”

The pair further added that a blockchain-based collateral platform could help lender organizations to create a better portfolio of securitized assets. Such assets can either be sold or traded faster.  The duo clarified that with the help of blockchain, revalidation of data can be eliminated. The time required to trade and settle can be improved, resulting in significant cost savings for organizations.

blockchain-based collateral platform could help lender organizations to create a better portfolio of digital assets.

Last month, IBM announced that it would support the customer experience of Lenovo’s Data Center Group with blockchain-powered service solutions. IBM informed that this development would apply to 200 countries worldwide. IBM highlighted that customer service demands had reached new standards. They are expected to easily integrate various networks and be online round the clock.

The duo finally indicated that many banks have accepted blockchain by experimenting with it in payment transactions, clearing/settlement, and digital identity. This development would have a sizeable impact on all the stakeholders, changing the way of conducting business and adding value to the existing systems.