Huaxia Bank adopted closed internet system for SME supply chain financing

Same risks, but better turnover.

Huaxia Bank has adopted a closed internet system called Rong-xin-tong designed to smooth its SME supply chain financing and more closely monitor borrowers’ cashflow.

According to a research note from CCB International, this system is a good example of how the banks are leveraging the internet to improve risk management and facilitate credit extension.

Traditionally, it has been the core customers--the manufacturers--that have borne the default risk of the distributors’ (mostly SMEs) accounts receivable.

Here's more from CCB International:

Today, using Rong-xin-tong, the banks provide credit facilities to distributors with a guarantee from the core customer.

Under this system, the core customer still bears the same risk, but these customers can now achieve better cash flow and higher sales turnover due to the credit support to distributors from the banks.

The closed system adopted by Huaxia Bank ensures that all credit facilities drawn by distributors go to the core customer’s account.