Mahindra Group, IBM to develop blockchain solution for supply chain finance

This will be first-of-its kind application outside of the banking industry

The Mahindra Group and IBM on Wednesday announced the development of a blockchain solution that 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 through a permissioned distributed ledger, said the company in a press 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 their part of the process, ensuring efficiency, consistency, trust and transparency, while safeguarding sensitive information.

"The Mahindra Group is pioneering the use of blockchain to disrupt its traditional businesses and drive future growth. We are actively looking at other applications across the Group in financial services, auto, mobility and agritech," said Anish Shah, Group President (Strategy), Mahindra Group. "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."

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. Supplier-to-manufacturer invoice discounting processes have historically been said to be difficult, slow and risky, requiring each party to maintain and manually update separate ledgers.

"Blockchain is poised to revolutionise business like the Internet did, and IBM is at the forefront of the revolutionThe 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," said Lula Mohanty, Managing Partner of IBM Global Business Services, IBM ISA.