Chile SMEs seen as prime target for blockchain-supported financing

Blockchain is a highly disruptive technology and is still not fully understood by many – but it has the potential to help companies slash costs and innovate.

And in Chile the distributed ledger technology could also alter the SME financing landscape, Microsoft Chile said during a blockchain workshop in capital Santiago.

Microsoft has partnered with Latin American business networking platform Gosocket, which is used by firms that issue and receive electronic invoices and by associated service providers such as financial institutions.

Gosocket, headquartered in Chile and present in 10 countries in the region, has launched a blockchain-based solution, known as ARAP, geared primarily to electronic factoring transactions. ARAP is based on Microsoft's blockchain-as-a-platform solution and manages accounts payable and accounts receivable information.

Chile is a well-established player in terms of electronic factoring and electronic invoicing - something which Microsoft Chile's director of technology and innovation, Wilson País, said constitutes a great opportunity.

País told BNamericas on the sidelines of the workshop that the country is fertile territory in which to develop and deploy blockchain-based financing solutions geared to SMEs.

"Here in Chile, Microsoft sees a lot of potential with our partner Gosocket to work with this technology, taking advantage of Chile's leading position in electronic factoring and electronic invoicing. This constitutes a great environment to apply the technology, boosting SMEs, creating new models of financing - helping SMEs with the main problem they face today which is accessing capital at low interest rates."

Blockchain is a distributed, immutable ledger for recording the history of transactions. In other words, one party cannot unilaterally change a ledger. It is still in its early phases of development.

In Chile, which has the biggest factoring market in the world in terms of turnover to GDP, all domestic electronic factoring transactions must go through a central system managed by the country's tax authority SII. Chile is a trailblazer in the region in this respect - no other country in Latin America has a similar central registry.

Founded at the end of 2011 to ease the electronic invoicing process for purchasers and suppliers, Gosocket unveiled the blockchain platform in Mexico last month.

In related news, Chile's banking regulator Sbif has joined the the global network of members of the enterprise software company R3, as a regulatory member. This, R3 said, will allow it to stay up-to-date on the latest advances and implementations of distributed ledger technologies in financial services.

R3 works with over 100 banks, financial institutions, regulators, trade associations, professional services firms and technology companies to develop Corda, its distributed ledger platform designed specifically for financial services.