Payments, Internet-based automated finance (IBAF): automating process chains with integrated financing solutions

The years since the pandemic have exposed the vulnerability and inefficiency of supply chain processes. Supply chain automation aims to optimise these processes across the entire supply chain – from raw materials extraction right up to the end customer.

Integrating financial solutions is central to this innovation. With IBAF, Telekom subsidiary T-Systems and Commerzbank are harnessing technologies such as 5G campus networks, cloud, artificial intelligence, the Internet of Things (IoT), sensor technology and blockchain/distributed ledger technologies (DLT). The partner’s aim is to significantly reduce manual billing processes by automating payment flows along supply chains based on events – and to pave the way for automated supply chain finance and other networked financial services.

The automated financial solution helps manufacturers, suppliers and logistics companies to bill and finance the flow of their goods. The IoT sensors and T-Systems’ integration platform trigger orders and payments, which Commerzbank then executes fully automatically.

The delivery of and payment for materials on time is especially important for manufacturing companies. This physical process can be automated and digitalised using modern technology – for example with data generated by sensors on pallets. The movement of goods in transit along supply chains can be determined with the help of tracking technologies. This creates a solid basis of data that can be used by manufacturers, suppliers, transport service providers and Commerzbank to communicate digitally and in real time about the flow of goods.

Step 1: Defining smart contracts

Buyer sets conditions (i.e. “trigger events”) in immutable electronic contracts (“smart contracts”) that must be met in order for subsequent processes to be initiated automatically.

Step 2: Collecting data

Supplier feeds data (sensor, ERP, transport, and/or warehouse data, etc.) via API interface.

Step 3: Triggering subsequent processes

If the data from the physical supply chain confirms that the smart contracts have been fulfilled, financial transactions (e.g. SEPA credits or debits) are automatically triggered.