Singapore and banks jointly develop first blockchain application for invoice finance

Translation: Prince Gong

Singapore has always been a frontrunner when it comes to innovation and the application of new technologies in the financial sector, and the country has now proven this once again by developing the first application of blockchain technology for the banking and financial sectors.

Although still in the proof-of-concept stage, the new blockchain application was developed by the Infocomm Development Authority of Singapore, DBS Bank and Standard Chartered Bank. The concept device will be used to make invoice finance trade safer and simpler for both businesses and lending banks.

Invoice financing is used by businesses in many countries around the world, often to improve cash flow. Companies borrow funds from banks and financial institutions using customer invoices as collateral. This new proof-of-concept application will allow banks to digitize invoices and upload them as digital assets on a decentralized ledger. The blockchain-based decentralized ledger will serve as a common data repository that all participating banks can access and check the status of finance-related applications/invoices at any time.

Using distributed ledger technology like blockchain allows businesses/banks to maintain confidentiality and perform due diligence at the same time. These uploaded invoices are verified by the bank to ensure that the same invoice is not pledged multiple times. In addition to reducing financial risks, the application can also reduce the processing time required for payments.

The proof of concept distributed ledger is the first application of a collaboration between the Infocomm Development Authority of Singapore and a well-known bank to enhance the security of invoice financing trade. Although the product is still in the conceptual stage and its use is limited, it is certainly an important step in the Singapore government's efforts to establish itself as a "smart nation".