IBM and India's Mahindra Group are building a blockchain system to handle invoice discounting, a process in which suppliers borrow against unpaid invoices. The work comes as banks and companies grappl
IBM and India's Mahindra Group are building a blockchain system to handle invoice discounting, a process in which suppliers borrow against unpaid invoices. The work comes as banks and companies grapple with an approach that eats up time and carries risk. Under the traditional method, each party maintains its own ledgers and updates them by hand, a setup that breeds delays and errors.
The blockchain platform consolidates these records on a shared ledger that all participants can access and update in real time. Suppliers get faster access to credit, and lenders gain confidence in the transactions, which encourages more firms to enter the market and compete for business. The system strengthens security and gives everyone involved better visibility into what's happening.
Anish Shah, group president of strategy at Mahindra, described the project as a watershed for blockchain in supply chain finance. "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," Shah said. "Working with IBM, we will work to build, test, scale and refine this solution over time."
Mahindra sees blockchain as useful well beyond supply chain finance. Shah pointed to potential applications in financial services, automotive, mobility and agriculture. The group's financial services arm, Mahindra & Mahindra Financial Services Ltd., is taking the lead on building products for small and medium-sized companies that leverage blockchain.
Mahindra Group operates across multiple sectors. The conglomerate runs insurance businesses, software companies, aerospace manufacturers, defense contractors, energy producers and equipment makers. Its real estate and retail operations complete a portfolio spanning much of India's economy.
The cloud platform will serve as one of India's first major blockchain projects for supply chain finance outside the traditional banking sector. A permissioned ledger means each party sees only the transactions that matter to them, keeping sensitive data private while ensuring no one can alter the records. Suppliers, manufacturers and lenders all draw from the same information.
Lula Mohanty, managing partner of IBM Global Business Services at IBM ISA, pointed to potential applications across multiple sectors. "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," Mohanty said.
