Does Bank of Communications' pioneering "decoupling" factoring model force competitors to follow suit or spark differentiated competition?

Bank of Communications is forcibly replacing core enterprise rights confirmation with data models, aiming to fundamentally address the long-standing issues in financing the steel industry supply chain.

Text | Huamao Rong Finance Content Team

Produced by | Trade Finance

On March 4, 2026, Bank of Communications announced that its innovative product, “Jiaoyin Rongyi Shou,” successfully launched at a large steel group in North China. This is not just a product breakthrough but also a significant progress in the bank’s pioneering “de-nuclear” factoring model in China.

The financing structure of the steel industry supply chain is inherently unbalanced. A vast number of small and micro suppliers are isolated from traditional finance, while the rights confirmation process relying on core enterprises is lengthy and lacks motivation. Bank of Communications’ breakthrough focuses on exploring a new balance among risk, cost, and business sustainability.

Traditional Factoring: Dependence on Rights Confirmation and Lack of Incentives

The financing dilemma in the steel supply chain stems from its structure. On one end, large steel companies have strong credit and smooth financing; on the other, numerous small and micro suppliers are excluded from traditional financial systems due to lack of collateral and standardized financial reports.

A 2025 survey by the China Small and Medium Enterprise Association shows that the average loan approval rate for SMEs in the steel industry is only 58%, 12 percentage points lower than the industry average; the average financing cost is as high as 5.8%, 2.3 percentage points higher than large enterprises.

The core issue with traditional factoring is the “dependence on rights confirmation of core enterprises.” Banks outsource risk assessment, but rights confirmation involves multiple departments, taking several weeks, which is severely disconnected from the “short, small, frequent, urgent” needs of small and micro enterprises.

Deeper contradictions lie in the dual lack of economic motivation. Banks find it difficult to cover high costs with profits from single small micro loans; confirming rights for numerous suppliers increases management burden and off-balance sheet risks. This mechanism is logically difficult to sustain.

Credit Reconstruction: Data-Based Credit Replaces Subject Credit

The “de-nuclear” model attempts to break the deadlock of single-source credit. Traditional risk control almost entirely relies on the static credit of core enterprises.

Bank of Communications’ practice is based on a different observation: in a stable supply chain, continuous and high-frequency real transaction behaviors constitute a dynamic credit evaluation system. Compared to lagging financial reports, transaction data can better reflect operational status in real time.

“Jiaoyin Rongyi Shou” shifts the risk control focus from “who is trading” to “how they are trading.” By directly connecting to high-frequency data such as transactions, orders, and logistics, AI models quantify behavioral variables like order stability and fulfillment quality.

However, this represents a fundamental shift in risk management—moving from “credit” judgments of people to “data” verification of objects. The authenticity, continuity, and compliance of data become critical; fake data at the source will cause models to fail. Meanwhile, the “black box” risk of AI models requires banks to build robust data governance and model risk control systems.

“The essence of ‘de-nuclear’ is the deconstruction and re-anchoring of the credit source. It reconstructs the foundation of risk assessment from a single ‘subject promise’ to a real-time verifiable ‘data trail.’”

Efficiency Revolution: Automation Drives Cost Transformation

The economic feasibility of this model is built on a revolutionary cost structure brought by full-process online and automated operations. Video due diligence, electronic signatures, and intelligent approval automate many manual steps.

This not only compresses the experience from “weekly” to “minute-level” but also significantly reduces the cost per transaction. The bank’s “second-level” financing products have already achieved minute-level approval in some scenarios.

Efficiency improvements rewrite the financial model. Under traditional models, the profit per transaction is offset by high costs, leaving banks with little internal motivation. The core breakthrough of the “de-nuclear” model is flattening the marginal cost curve through automation. This makes it financially sustainable to serve a massive number of small-scale clients for the first time.

However, automation also amplifies fraud and operational risks, demanding real-time anti-fraud and in-process monitoring.

Boundary Expansion: Mode Replication and Data Control

The successful implementation of “Jiaoyin Rongyi Shou” confirms the logical feasibility. Early exploration, such as Shenzhen Branch’s “SF Warehouse e-Loan” launched in November 2024, demonstrated the replicability of warehouse scenarios.

In 2025, “Jiaoyin Port Shipping Finance” was successfully applied in port supply chains, further validating transferability in logistics. According to January 2026 data from the National Bureau of Statistics, by the end of 2025, accounts receivable of industrial enterprises above designated size nationwide reached 27.43 trillion yuan, with an average collection period of 67.9 days, providing broad scenarios for the model.

However, widespread replication faces two major constraints. One is the “availability and standardization of industry data.” The other, more critical, is the “battle for control over industrial data.”

While the new model does not require rights confirmation, it still needs core enterprises to open data interfaces, touching on their control over data assets and security concerns. Opening data involves trade secrets; refusal to open may hinder supply chain efficiency.

Whether banks can design value-sharing schemes beyond traditional credit and provide solid compliance guarantees is key to unlocking cooperation. According to Bank of Communications’ 2025 semi-annual report, it serves about 55,900 industrial chain enterprises, and its large existing customer base is a significant bargaining chip.

The breakthrough of the “de-nuclear” model validates a new path for credit generation: financial credit can detach from static reliance on a single strong subject and instead anchor on real, dynamic industrial activity flows. This marks a shift from being a “credit intermediary” to a “risk pricer” based on data decoding.

However, the ultimate path remains unclear. A fundamental issue has emerged: “As financial credit increasingly depends on industrial data generation, whoever controls the data flow gatekeeper holds the potential power for credit definition and risk pricing.”

The paradox is that banks attempt to free themselves from reliance on core enterprises at the credit level but establish a deeper connection at the data level. The “data trail” on which credit assessment depends is entirely dependent on whether core enterprises continuously open interfaces.

This effectively replaces explicit “credit risk” with more covert “data supply risk,” representing a profound transformation of credit risk form, ultimately challenging banks’ independence in risk pricing.

In future industrial landscapes, supply chain finance may not simply choose between “bank data platforms” or “closed-loop industrial finance,” but may evolve into a new power structure based on complex data ownership battles. This silent restructuring will define the ultimate form of industry-finance symbiosis in the digital age.

As we enter the first year of the “14th Five-Year Plan,” supply chain finance shoulders a key mission in serving modern industrial systems and developing new productive forces. Against this backdrop, the 12th China Supply Chain Finance Annual Conference in 2026 is timely held to gather industry wisdom. The conference will be guided by national strategies, exploring topics such as how state-owned enterprises as “chain leaders” can empower entire industry chains, and new cross-border financial solutions under RMB internationalization, among others, to jointly seek feasible paths for financial services to support real economy and industrial upgrading.

This event will confront the industry’s cutting-edge practical challenges and innovative ideas. Topics include digital penetration of commodity trade rights, new financial models for renewable energy metals, designing “industry-finance-data” closed loops for urban investment and park platforms, analyzing differentiated risk control in live e-commerce supply chains, addressing compliance challenges from “penetrative supervision” and the Golden Tax Phase IV, and reshaping risk control and pricing through data asset “inclusion.” The themes focus on digital transformation, industrial change, and regulatory evolution, aiming to clarify future trends in risk management, technological integration, and ecological co-building.

This is a valuable platform for addressing real issues and seeking new solutions. You will hear policy insights, learn from exemplary enterprises’ breakthroughs, and engage in in-depth exchanges with industry stakeholders. Whether exploring differentiated strategies for regional small and medium banks or balancing innovation and compliance, sparks will fly in these dialogues. The concurrent “2026 China Supply Chain Finance Industry Benchmarking Awards” aims to honor outstanding practitioners solving these industry challenges. We sincerely invite you to join us in Beijing on April 8, 2026, to co-create a new blueprint for industry development.

This is a major industry event for supply chain finance. We look forward to your participation, sharing insights, and contributing to industry progress.

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