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BizDay: Blockchain for Procure to Pay Bank as a Platform Strategy, Digital Ventures


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Orapong Thien-Ngern from Digital Ventures presents on DevDay at CordaCon 2019.

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BizDay: Blockchain for Procure to Pay Bank as a Platform Strategy, Digital Ventures

  1. 1. Blockchain for Procure to Pay October 2019
  2. 2. DV CONFIDENTIAL Digital Ventures is a subsidiary of Siam Commercial Bank (SCB), one of the largest banks in Thailand. • Asset – USD 100 Billion • Employees – 27,000 • Revenue – USD 4.6 Billion • Branches – 961 Venture Capital Products & Labs Accelerator DV Highlights • Established in February 2016 • Managing USD 150m investment consisting of USD 100m in international markets and USD 50m in China • Aiming to disrupt traditional banking businesses by applying leading edge technologies • Initiated U.reka program to stimulate deep technology startups in Thailand • Having approximately 120 employees with the majority having deep technical capabilities • Build relationships with leading VCs to gain access to technology startups • Invest in VCs’ funds and startups for technology access and capital gain • Apply leading edge technologies to create new products and services • Explore new business model to disrupt traditional banking services • Keep track of local startup developments • Help the country to be more competitive in financial technology creation
  3. 3. DV CONFIDENTIAL We are facing disruptive forces in Thailand similar to banks in other countries. ROE (%) Price/Book Ratio 2010 2011 2012 2013 2014 2015 2016 2017 2018 11% 15% 17% 20% 22% 21% 20% 12% 12% 16% 10% 15% 13% 14% 12% 10% 15% 16% 2.3 2.2 2.9 2.0 2.2 1.3 1.6 1.4 1.2 1.7 1.9 1.7 1.2 2010 2011 2012 2013 2014 2015 2016 2017 2018 1.1 1.4 1.5 1.1 1.3 Banking ROE Banking P/B Thailand banking industrySCB SOURCE: Bloomberg Industry de-rating Industry de-rating
  4. 4. DV CONFIDENTIAL One way to survive is to create “Bank as a Platform”, which, in this case, focuses on addressing complexity in supply chain management. Payment Banks • Competing to be the main operating account • Cutting fees for cash management & payment to zero • Bearing cost for uncertain revenue Financing Banks • Consuming time and resources to sell and process supply chain lending • Susceptible to Fraud • Assuming collection risk and consuming resources to perform collection • Unable to offer competitive rate Buyers • Handling a lot of documents (PO, GR, Invoices) and variations • Consuming time and resources in complex document verification processes • Having big burden on document retention • Susceptible to errors, fraud and leakages Suppliers • Waiting for long payment cycle • Spending a lot of time chasing the payment • Limiting access to supply chain financing Government • Too many documents, too complex to audit • Consuming significant time and resources • Adding negative impact to ease of doing business & national competitiveness
  5. 5. DV CONFIDENTIAL B2P was developed on Blockchain DLT, which enabled us to tackle the complex problems with simpler solution not achievable with traditional technologies. Payment/Financing Banks • Compete on added values to customers rather than reducing fees • Acquire mass customers all at once • Offer differentiated lending services Buyers • Get all documents in electronic forms without complex integration • Automate the complex document verification process • Keep all electronic records in a better organized manner • Eliminate errors, fraud and leakages Suppliers • Same day invoice approval • DIY for approval & payment status • Instance access to invoice financing • Lower borrowing rate Government • 100% Auditability • More Complete Audit with Financial Transactional Data • Significant Reduction of Time & Resources • Increase Ease of Doing Business
  6. 6. DV CONFIDENTIAL Our first customer, SCG, has provided a strong testimony based on the initial results shared in the public stating significant productivity improvement. Key Highlights • The solution was launched in August 2018. • So far, only 275 suppliers were onboarded. • SCG has indicated that they achieved substantial saving of 50% in time and 70% in cost reductions. • The slow ramp-up was due to significant variations of requirements. • The solution has reached the maturity that will enable us to scale. • We are planning to bring up the total of 2,400 suppliers by the end of this year. • In addition, we have already onboarded San Siri (the largest developer) and Minors (a leading Food & Beverage company). • The platform has processed more than THB 1.5 Billion transactions.
  7. 7. DV CONFIDENTIAL The remarkable results were achievable with the combination of applying blockchain DLT and modern application design focusing on increasing labor productivity. Design Principles • User Focus – Workspaces based on users’ roles & responsibilities (i.e. Purchasing Manager, Account Payable Officer, etc.) • Modern Architecture – Dashboard style customizable by users • Simple and Intuitive – Breakdown to simple tasks to facilitate faster onboarding Blockchain – Disruptive Technology • Simpler Integration – DLT enables data to be shared and processed simultaneously across multiple blockchain nodes overcoming the limitation of having to rely on complex and costly point-to-point system integration. • Global Scalability – Secured transactions can be exchanged through the Internet making it highly scalable. • Ideal for Trade Transactions – Blockchain is ideal for trade transactions where records need to be audited for tax, fraud detection, etc. • New Business Model Enablement –These include different ways of facilitating cross-boarder trades, foreign exchange (FX), cryptocurrency, etc.
  8. 8. DV CONFIDENTIAL We are planning to further expand by building a network of leading banks, which will offer comprehensive services and opportunities to create more innovative solutions. Global Expansion – Bank Partnership • Customer Reach – Banks in general have very strong relationship in their local markets, especially with large corporation (buyers) and SME (suppliers). • Credibility – Banks normally have higher credibility than Fintech. Having banks as partners will make it easier for customers to be onboard. • Differentiated Solution – Banks can provide comprehensive financial services on top of B2P platform creating a market differentiation. • Innovation – Having cross-regional banks as partners, will offer opportunities to create more innovative services to disrupt the current business model such as using crypto currency to facilitate Foreign Exchange (FX), bank-to-bank guarantees without using Letter of Illustrative
  9. 9. DV CONFIDENTIAL We have a solid roadmap to continue enhancing our platform and expanding the business with an aspiration to become a major global platform for trade. B2P for Domestic Trade in Other Countries Order to Cash for Domestic Trade in Other Countries Global Trade Platform Leveraging the Network • Crypto Currency Issuer • Market Maker • Etc. B2P for Domestic Trade in Thailand Order to Cash for Domestic Trade in Thailand Augmented Solution to ERP for Thailand B2P for Cross Border Trade Order to Cash for Cross Border Trade Augmented ERP Global Solution Augmented Solution to ERP in Other Countries
  10. 10. DV CONFIDENTIAL The solution won two international awards in 2019 from The Asset in Hong Kong. Source: The Best Supply Chain Solution Editors’ Triple Star Award The Asset – Asset Asian Awards