(Yicai Global) Oct. 26 -- Three Chinese banks have jointly launched a blockchain platform for forfaiting trading with transactions reaching CNY30 million (USD4.3 million on the first day.

The Bank of China, China CITIC Bank and China Minsheng Banking brought the system online today, according to the state-backed China Internet Information Center. The platform ensures that all business is processed on the blockchain and fully automates connections based on its distributed architecture.

Forfaiting business is a new type of trade finance product closely related to export. It refers to the purchase of receivables from exporters by banks or other financial institutions that have no recourse.

The system is the second innovative project in China's banking industry to use blockchain after the first inter-bank blockchain-based letter of credit system launched in June last year.

The platform adopts a form of consortium blockchain with infrastructure built by Hangzhou-based Yunphant Blockchain. They three banks will jointly develop it further based on the current industry-wide business processes.

The platform independently runs blockchain application layer functions according to inter-bank transaction business scenarios. The system provides pre-inquiry, inquiry after asset issuance, fund quotations and other multi-scenario application service processes with concurrent business and serial logic for the forfaiting, which ensures that the system is accessible, flexible and expandable.

The platform solves four major problems associated with traditional inter-bank asset transactions using blockchain, big data and other technological means.

The first problem solved is the distortion of transaction information on mobile phones, email, WeChat and other traditional information distribution channels. The platform ensures that asset information is true, unique and effective through encrypted identity authentication, core asset element verification, and intelligent credit rating. These help to standardize transactions, stabilize market prices, facilitate operations and save on transaction costs.

The platform also connects the price matching and asset transfers. It integrates asset issuance, capital quotation, the offer, creditor's rights transfer and other processes to provide a one-stop service, effectively avoiding delays in transactions.

It also tackles the problem of non-uniformity in multi-agent transaction standards. It uploads the unified and standardized core transaction data to the blockchain and makes core trading processes uniform via intelligent contracts, consensus mechanism, distributed databases, and customized business points under the premise of seeking common ground while reserving differences. It greatly reduces the ineffective frictions among multiple trading entities regarding texts, elements, and process matching, making the platform a facilitator of inter-bank forfaiting transactions.

The platform also resolves the heavy workload of transaction operators and high confidentiality costs through its high-degree of digitization, blockchain structure, multi-node storage, state recourse, data sharing and high-encryption security.

Editor: William Clegg